Choice of Invoice Currency and Exchange Rate Risk Management: FY2022 questionnaire survey with Japanese overseas subsidiaries

This study presents summary results from the FY2022 RIETI Questionnaire Survey where 22,529 Japanese overseas subsidiaries were surveyed. Our main findings based on survey answers from 1,390 respondent firms are as follows: First, in intra-firm trade between Japanese subsidiaries operating in Asia and Japanese head offices, the Asian currencies including renminbi (RMB) are often used as invoice currency, but the share of Asian currency-invoiced trade did not increase compared to the result of the FY2018 Survey. Second, RMB-invoiced transactions grow only in intra-firm trade with Japanese head offices. Intriguingly, RMB is not commonly used in intra-Asian trade: while other Asian currencies are more commonly used. Third, Japanese sales subsidiaries tend to have large currency mismatches between procurements of products invoiced in yen and the US dollar, and sales of products invoiced in local currencies, which calls for efficient foreign exchange risk management of Japanese subsidiaries.