Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156119
Authors: 
Sokolova, Maria V.
Year of Publication: 
2016
Series/Report no.: 
Graduate Institute of International and Development Studies Working Paper 03-2016
Abstract: 
This paper examines the relationship between the composition of exporters' currency pricing portfolio - number and value of product sales in different currencies at a destination - and their success in trade as measured by continuing to their exporting activity. Detailed investigation of currency choice data of Russian exporters between 2005-2009 shows that many exporters use only one currency pricing per destination. Among those who use more than one currency pricing, higher diversification is indeed associated with up to 18% higher odds of survival as an exporter at the product-destination. Nevertheless, many exporters still use only one currency pricing per destination. This puzzle is explained in this paper by incorporating the concept of "exchange rate hedging costs" into the existent literature on currency choice. These costs are firm-specific and relate to the complexity on the part of the firm of using more than one currency. The firms that have high exchange rate hedging costs will be using only one currency, but still continue exporting to the destination.
Subjects: 
international currency choice
currency portfolio
exchange rate
export data
vehicle currency
emerging economy
exchange rate hedging
JEL: 
F14
F31
F36
F41
G11
Document Type: 
Working Paper

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