The Choice of Invoicing Currency in Merchandise Trade
- 1 November 1981
- journal article
- Published by Cambridge University Press (CUP) in National Institute Economic Review
- Vol. 98, 60-72
- https://doi.org/10.1177/002795018109800105
Abstract
If an exporter or importer uses a foreign currency, his income or costs will be immediately affected when the exchange rate changes; if he uses his own, there will be no effect on contracts that are already fixed. Analysing the pattern of invoicing throws light on what objectives are important in firms' decisions, and in particular on their attitudes toward foreign exchange risk. At the aggregate level, their choice of currency influences the effect of an exchange rate change on a country's balance of trade.Keywords
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