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The Structural Determinants of Invoice Currencies in Japan: The Case of Foreign Trade with East Asian Countries

In: Financial Deregulation and Integration in East Asia, NBER-EASE Volume 5

  • Shin-ichi Fukuda

This paper investigates why invoice rations of the Japanese yen are relatively low for Japan's foreign trades. The first part of the paper investigates the determinants of invoice currencies in Japan's exports with East Asian countries. Focusing on the heavy reliance of Japan's exports on the United States, we show that "pricing-to-market"(PTM) behavior of Japanese exporters may explain the choice of invoice currency by Japanese exports well. The second part of the paper considers other structural determinants of the invoice currencies. In the analysis, we focus on invoice currency rations in Japan's imports and on the relation between invoice ratios and the trade dependency. We show that low yen-invoiced rations are mainly caused by the large shares of oil and raw materials in Japan's imports. We also show that recent changes in Japan's invoice currency ratios are due to the changing trade dependency to the United States.

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This chapter was published in:
  • Takatoshi Ito & Anne O. Krueger, 1996. "Financial Deregulation and Integration in East Asia, NBER-EASE Volume 5," NBER Books, National Bureau of Economic Research, Inc, number ito_96-1, Abril.
  • This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 8561.
    Handle: RePEc:nbr:nberch:8561
    Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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    Web page: http://www.nber.org
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