Foreign Currency Pricing

Levina, Irina; Zamulin, Oleg

doi:10.1353/mcb.2006.0044

Cited by 5 publications

(3 citation statements)

References 16 publications

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“…Parsons and Sato relate the pass‐through of East Asian exporters to their U.S. dollar invoicing behavior. See Friberg (1998) and Levina and Zamulin (2006) for a theoretical analysis of the third currency (i.e., U.S. dollar) pricing.…”

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confidence: 99%

Exchange Rate Changes and Inflation in Post‐Crisis Asian Economies: Vector Autoregression Analysis of the Exchange Rate Pass‐Through

Ito¹,

Sato²

2008

J of Money Credit Banking

141

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Macro-economic consequences of large currency depreciations among the crisis-hit Asian economies varied from one country to another. Inflation did not soar after the Asian currency crisis of 1997-98 in most crisis-hit countries except Indonesia where high inflation followed a very large nominal depreciation of the rupiah. The high inflation meant a loss of price competitive advantage, a key for economic recovery from a crisis. This paper examines the pass-through effects of exchange rate changes on the domestic prices in the East Asian economies using a vector autoregression analysis. The main results are as follows: (i) the degree of exchange rate pass-through to import prices was quite high in the crisis-hit economies; (ii) the pass-through to Consumer Price Index (CPI) was generally low, with a notable exception of Indonesia; and (iii) in Indonesia, both the impulse response of monetary policy variables to exchange rate shocks and that of CPI to monetary policy shocks were positive, large, and statistically significant. Thus, Indonesia's accommodative monetary policy, coupled with the high degree of CPI responsiveness to exchange rate changes was an important factor in the inflation-depreciation spiral in the wake of the currency crisis. Copyright (c) 2008 The Ohio State University.

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confidence: 99%

Exchange Rate Changes and Inflation in Post‐Crisis Asian Economies: Vector Autoregression Analysis of the Exchange Rate Pass‐Through

Ito¹,

Sato²

2008

J of Money Credit Banking

141

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“…They show that highly dollarized banking system induces the central bank, as the last resort lender, to hold larger dollars reserves. Levina and Zamulin (2006) argue that in the presence of price rigidities, and in the absence of indexation mechanisms, dollar pricing might be an optimal strategy for a firm. Recently, Drenik and Perez (2017) have shown that dollar pricing of domestic sales might be a choice for firms that seek to hedge inflation risk in the absence of other inflationindexation mechanisms, particularly in the case of durable goods.…”

Section: Literature Reviewmentioning

confidence: 99%

Foreign currency invoicing of domestic transactions as a hedging strategy: evidence for Uruguay

Licandro

Mello

2019

Journal of Applied Economics

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This study is an empirical analysis of the factors associated with the use of the US dollar for the invoicing of domestic transactions, which is a common practice of Uruguayan firms. Using a novel dataset we find that both the input and debt structure of firms are relevant for determining their currency of invoicing. Intuitively, firms will generate cash flows in US dollar if they have to make expenditures in foreign currency, either because they use imported inputs or if they cover debt services with currency risk. This practice can be seen as a hedging strategy to mitigate exchange risk in a highly dollarized economy. We empirically show that firms use their flows position to hedge currency mismatches in their stocks; domestic invoicing in US dollar is correlated with large negative financial positions, and the share of imported inputs and of exports.

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“…For example, in July 2007 a new law became effective banning -with some exceptions, in particular for real estate -domestic prices from being quoted in currencies other than the rouble (Moscow News, 2007). An analysis of the determinants of foreign currency pricing in Russia is provided by Levina and Zamulin (2006).…”

Section: Parallel Vehicle Financing and Investment Currency -The Continued Dominance Of The Us Dollarmentioning

confidence: 99%

Russia, EU Enlargement and the Euro

Winkler

Polanski

2008

SSRN Journal

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Foreign Currency Pricing

Cited by 5 publications

References 16 publications

Exchange Rate Changes and Inflation in Post‐Crisis Asian Economies: Vector Autoregression Analysis of the Exchange Rate Pass‐Through

Exchange Rate Changes and Inflation in Post‐Crisis Asian Economies: Vector Autoregression Analysis of the Exchange Rate Pass‐Through

Foreign currency invoicing of domestic transactions as a hedging strategy: evidence for Uruguay

Russia, EU Enlargement and the Euro

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