Currency invoicing of US imports

✍ Scribed by Shabtai Donnenfeld; Alfred A. Haug

• Book ID: 102277336
• Publisher: John Wiley and Sons
• Year: 2008
• Tongue: English
• Weight: 157 KB
• Volume: 13
• Category: Article
• ISSN: 1076-9307
• DOI: 10.1002/ijfe.319

✦ Synopsis

Abstract

This paper provides an explanation for the choice of currency of invoice of exports to the US. We find an empirical relationship between the riskiness of the exchange rate and the fraction of imports invoiced in the importer's currency, the exporter's currency, and a third country currency. The higher the volatility of the exchange rate, the larger is the fraction of imports invoiced in the importer's currency. Consequently, the fraction of invoicing in the exporter's or a third country currency is inversely related to the volatility of the exchange rate. Copyright © 2007 John Wiley & Sons, Ltd.