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Journal Articles Journal of Money, Credit and Banking Year : 2022

Invoicing Currency and Financial Hedging

Abstract

We examine the link between exporters' currency choices and their use of financial hedging instruments. Large firms are more likely to use hedging instruments, especially those pricing in a foreign currency. We provide suggestive evidence that access to hedging instruments increases the probability of pricing in a foreign currency. A model of invoicing currency choice augmented with hedging can rationalize these facts. In the model, large firms that would have chosen to price in their own currency in the absence of hedging instruments can decide to set prices in a foreign currency if they have access to such instruments.
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Dates and versions

hal-03949044 , version 1 (20-01-2023)

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Victor Lyonnet, Julien Martin, Isabelle Mejean. Invoicing Currency and Financial Hedging. Journal of Money, Credit and Banking, 2022, 54 (8), pp.2411-2444. ⟨10.1111/jmcb.12966⟩. ⟨hal-03949044⟩
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