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

This questionnaire is part of a research project on "Exchange Rates and International Currency" conducted at RIETI. The aim of the project is to provide meaningful policy insights on how Japanese manufacturing firms and their subsidiaries should manage exchange rate risk and choose invoice currency against the backdrop of increased global production and sales networks. In 2010 and 2014, we conducted the first and the second comprehensive questionnaires in this series. The results provided valuable insights to policymakers as well as Japanese firms 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.

Over the past ten years, there have been considerable fluctuations in the Japanese yen. The Japanese Yen experienced unprecedented appreciation from 2007 to 2012. "Abenomics," an aggressive economic-stimulus policy introduced by Prime Minister Shinzo Abe at the end of 2012, successfully put an end to the strong appreciation and in-fact caused the yen to depreciate considerably. By the spring of 2015, the Yen reached 120 yen vis-a-vis the US dollar. Political events in 2016 such as the "Brexit" and the inauguration of a new president in the US have also brought about large fluctuations in the yen. Recently, mounting trade tensions between the US and China has caused some uncertainty in global trade. While on the other hand, new trade agreements, such as the Trans-Pacific Partnership Agreement among 11 countries (TPP11) and Japan-EU Economic Partnership Agreement seek to deepen trading relations between Japan and its trading partners. Through this third questionnaire, we hope to collect useful information on how Japanese subsidiaries overseas are embracing these new challenges and opportunities.