August 17, 2021: Seminar by Sonali Chowdhry on Firm-specific Determinants of the Invoicing Currency Choice in International Trade
Research macroeconomic analysis by Boz et al. (2021) finds an overall stability of invoicing currency patterns in global trade and a further dominant role the US dollar in this regard. Despite the general stability of invoicing currency patterns, they find an increasing use of the Euro as invoicing currency for trade in some European and African countries. The Chinese currency, Renminbi, is found to be also increasingly used by some Asian countries for their trade with China. Their analysis indicates that the invoicing currency choice is related to strategic complementarities and cross-border input-output linkages.
In contrast to Boz et al. (2021) and other studies based on aggregated datasets, economic literature on the invoicing currency choice from trading firms’ perspective based on disaggregated datasets is still limited but growing. A recent analysis by Sonali Chowdhry (Kiel Institute and KCG) on firm-specific determinants of the invoicing currency choice is one of the studies that can help provide a better understanding of trading firms’ currency choice and their exchange rate risk management. She will give an online seminar “Invoicing Currency Choice: Preliminary Evidence from French Firm-level Data” on August 17, 2021 (Tuesday) to share and discuss her first research findings with seminar participants.
Abstract: This paper examines firm-specific determinants of the choice of invoicing currency in international trade. Using highly disaggregated customs data from France spanning 2011-2017, it provides new stylised facts on the selection of firms into local currency pricing (LCP) and the dynamics of LCP across and within firms. In doing so, the paper contributes to the growing literature on the exchange rate risk management of trading firms. The firm-level evidence presented also holds policy implications for the transmission of trade shocks across borders and efforts by Central Banks to promote the use of local currencies for settlements.
The seminar will take place via Zoom at 12:30-13:30 on August 17, 2021 (Tuesday). More information can be found here.