Questionnaire Survey on the Choice of Invoice Currency by Japanese Overseas Subsidiaries

The aim of the project is to provide meaningful policy implications for how Japanese manufacturing firms and their subsidiaries should manage exchange rate risk and choose invoice currency as global production and sales network has grown rapidly. In FY2010, FY2014, and FY2018 we conducted the first, the second, and the third comprehensive questionnaire surveys to Japanese overseas subsidiaries, which successfully provided to policy makers as well as Japanese firms the useful information on which currency is most used in subsidiaries’ local sales and trade along supply chains and how subsidiaries can manage their exposure to exchange rate risk.

Since the third survey in FY2018, we have experienced serious situations. Since 2020, we have suffered from the COVID-19 pandemic, which gives us serious negative impact on global economies. Since February 2022, Ukraine has been invaded by Russia and the price of mineral fuels has increased substantially, which facilitates price inflation in all countries around the world. In addition，Japanese yen has depreciated sharply since March 2022, and the yen reached 145 yen vis-à-vis the US dollar in early September. We have a strong interest in how Japanese overseas subsidiaries have reacted to such serious events. More specifically, we collected useful information on how Japanese subsidiaries have managed their exchange rate risks and whether they have changed their export pricing behavior and the choice of invoice currency in response to a substantial increase in the price of crude oil and other mineral resources. Our research based on this fourth questionnaire survey will have an insightful implication for trade and foreign exchange strategies of Japanese firms that face the above recent events and challenges.