Choice of Invoice Currency and Exchange Rate Risk Management: 2018 Questionnaire Survey of Japanese Overseas Subsidiaries

This study presents summary results from the 2018 RIETI Questionnaire Survey of 21,801 Japanese overseas subsidiaries. Our main findings are as follows: First, almost 60% of Japanese overseas subsidiaries are using their own discretion in choosing invoice currency and managing currency risk. This percentage has not changed from the past two surveys. Second, the usage of local Asian currencies as an invoice currency is increasing. The RMB and local Asian currencies are used for trade both with Japan and other countries, and such usage has increased significantly since the previous two surveys. Third, US dollar denominated transactions are decreasing with the increased use of local Asian currencies. In particular, the decrease in US dollar invoicing is large in trade with countries other than Japan. Fourth, Yen invoicing accounts for the largest share in the intermediate goods imports from Japan, while the share of US dollar invoicing exceeds that of Yen-denominated invoicing in exports to Japan. This trend was also confirmed in the past two surveys, however the share of Yen invoicing in exports to Japan decreased significantly. The above findings suggest that the use of the US dollar and the Yen among overseas subsidiaries in Asia gradually decreased, while the use of local Asian currencies including the RMB has steadily increased.