2021 RIETI Survey on Currency Risk Management and Invoice Currency Choice of Japanese Listed Manufacturing Firms

This paper reports the main results of the RIETI survey conducted in FY2021 regarding the choice of invoice currency and currency risk management efforts of Japanese exporters. We sent the questionnaire items to the 929 manufacturing companies that are engaged in overseas operations and listed on the Tokyo Stock Exchange (TSE). Based on the survey results, we report various aspects of respondent firms regarding the choice of invoice currency, currency risk management, and price revisions under exchange rate fluctuations. The main results are as follows. First, in terms of exports from Japan to the world, the share of the US dollar in exports by Japanese exporters remains around 50 percent while the share of the Japanese yen marginally increased to 41 percent; second, the share of other currencies, which mainly includes Asian currencies, reached 6 percent, and surpassed the share of the euro for the first time in our surveys; third, regarding currency risk management, the percentage of firms using currency risk hedging through the market, including currency forward contracts and currency options, significantly declined to 80 percent from above 90 percent in previous surveys; fourth, the survey confirms that firms are more reluctant to change their price when anticipating yen depreciation than when anticipating yen appreciation; and fifth, by using the data of invoice currency choice by destination, we observe a steep increase in the usage of Asian currencies in exports and imports, especially the Chinese yuan, Thai baht and Indian rupee.