Determinants of invoice currency selection by Russian exporters[Анализ Факторов, Определяющих Выбор Валюты Контракта Российскими Экспортерами]

The presented paper empirically accesses the determinants of invoice currency choice by Russian exporters. The relevance of the work is dictated by the sanctions imposed against Russia, which, among other things, make international settlements in the dominant currencies difficult and facilitate the transition of Russian exporters and importers to settlements in other currencies. The existing economic literature considers the invoice currency as one of the most important factors of the magnitude of the exchange rate passthrough into prices and quantities. The basic assumption of such models is short-term price rigidity in terms of invoice currency, which is in line with the data. The dominant view is that the choice of contract currency made by exporters based on the desired medium-term exchange rate pass-through, which in turn depends on company’s share in the market and the intensity of imported components using. In this paper using the detailed data of customs statistics of the Russian Federation it is show that key determinants of the Russian exporter’s contract currency choice are the competitor’s choice of the contract currency, the firm’s market share, the invoice currency import structure and firm productivity, as well as the degree of differentiation of the exported product. The main conclusion is that the currency structure of export payments will change due to changes in the currency structure of imports, and in many product markets the short-term stability of the share of Russian exporters will suffer, including due to difficulties in using the US dollar as the currency for nominating exports.