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Dominant currency pricing in international trade of services

Retrieved on: 
Thursday, April 25, 2024
SF1, Goldberg, LCP, Statistics, Research Papers in Economics, VCP, Place of birth, Postal, A.4, Journal of International Economics, Business, International, ISIC, Data collection, Heritage, Macroeconomics, Banco de Portugal, Computer, Tech, Prevalence, MCI, Agriculture, Audiovisual, European Economic Association, CNY, Journal of Monetary Economics, Pauwels, Insurance, Paper, Corsetti, Laurent, Environment, R2, Portuguese Economic Journal, Website, Table, Working paper, VB, Public opinion, World Bank, Collection, Travel, Transport, Science, PII, International economics, PDF, ECB, Foreign exchange market, Policy, Angelo Bacchetta, Social science, Labour economics, Communication, Journal, Research, Classification, A.5, Literature, DCP, European Central Bank, Mining, Export, Equation, Monetary economics, Section 5, Practice of law, Elasticity, ISO, COVID-19, BIS, Electricity, Automation, The Economic Journal, Chung, Employment, A.2, Telecommunications, International Monetary Fund, Tourism, UTC+01:00, Section 4, IUSD, Health care, F14, Database, Section 3, PCP, International finance, NIPE, Annual report, Note, Section 2, Conference, CPI, Central bank, SH42, Incidence, FE, American Economic Review, SF3, Exercise, Test, Justice, Forestry, SK22, Quarterly Journal, GDP, Central Statistics Office (India), Green, SG1, B.1, SF, Swings, Payment, IES, A.6, JPY, Colum, Bank, Reproduction, World Trade Organization, IMF, SF2, F31, Geography, Data, SF4, Cryptocurrency

Abstract

Key Points: 
    • Abstract
      We analyze, for the first time, how firms choose the currency in which they price transactions
      in international trade of services and investigate, using direct evidence, whether the US dollar
      (USD) plays a dominant role in services trade.
    • JEL: F14, F31, F41
      Keywords: dominant currency paradigm, international trade, services.
    • Related research has
      shown that the US dollar (USD) exchange rate is a major source of swings in
      global trade in goods?a ?dominant currency pricing? (DCP) phenomenon?since
      most goods traded internationally are invoiced and sticky in USD.
    • Yet it is also key to look at dominant currency pricing in international trade
      in services for several reasons.
    • First, global trade in services is big?accounting for
      about a quarter of global gross trade flows and for around 40% in terms of valueadded trade.
    • Third, and relatedly, the
      future of globalisation might be in trade in intermediate services?as progress with
      digitech lowers technological barriers to such trade across borders.
    • But perhaps the main reason is that trade in services is conceptually different
      from trade in goods.
    • Our paper is the first, to our best knowledge, that analyzes how firms choose
      the currency in which they price transactions in international trade of services and
      that examines whether dominant currency pricing differs between trade in goods
      and services using direct evidence? hitherto unavailable?on patterns of currency
      choices in international transactions in services compared to goods.
    • Work on dominant currency pricing has
      almost exclusively focused on trade in goods.
    • One reason is that data on patterns
      in invoicing currency for trade in services are ?virtually nonexistent? (Adler et al.
    • Yet it is important to look at dominant currency pricing in international trade
      in services for several reasons.
    • Using the exporter?s (or producer) currency in exports is known in the literature as producer
      currency pricing (PCP), while using the importer?s currency is known as local currency pricing (LCP)
      and using a third currency is known as vehicle currency pricing (VCP).
    • Our paper is the first, to our best knowledge, that analyzes how firms choose the
      currency in which they price transactions in international trade of services and that
      examines whether dominant currency pricing differs between international trade in
      goods and services using direct evidence ? hitherto unavailable ? on patterns of
      currency choices in international transactions in services compared to goods.
    • First,
      we rule out compositional effects, that is that differences in the use of currencies
      reflect differences in trade partners in services vs. goods trade.
    • Both in extra-EU and intra-EU trade, the EUR is the
      most widely used currency, be it on the export or import side.
    • Based
      on the framework, we stress which factors should determine currency choices in
      international trade, and to what extent one should expect differences between
      services trade and goods trade.
    • Second, it can price in the importer?s currency
      (local currency pricing, LCP).4 Third, it can use a third currency, say currency
      v (vehicle currency pricing, VCP).
    • That is,
      the currency choice problem is equivalent to determining the currency in which the
      desired price is least volatile.
    • (2022)
      provide systematic empirical evidence ? firm size and exposure to foreign currencies
      in imported inputs ? should also shape currency choices in services trade.
    • Dominant currency pricing in USD ? services vs. goods trade
      Having established that currency choice in international trade of services is an
      active firm-level decision as well as the determinants of this decision, we now

      8.

    • Services and goods exports: prevalence of different pricing strategies (percent)
      Notes: The table shows the shares (in value terms) of different pricing strategies: producer currency
      pricing (PCP), local currency pricing (LCP) and vehicle currency pricing (VCP).
    • To make comparisons with goods trade, we rely on Eurostat?s
      macro data on international trade in goods by invoivcing currency.
    • If intra-EU trade is more important in services than
      in goods trade, this could hence be an explanation for the lower prevalence of the
      USD in services trade.
    • We showed
      that while the USD is also extensively used as a vehicle currency in services trade, its
      prevalence is systematically lower than in goods trade.
    • Hence for all travel services exports
      the invoicing currency is the EUR; for travel imports it is the currency of the
      destination of travel (i.e.
    • Also for these

      ECB Working Paper Series No 2932

      33

      services it seems plausible that trade does not take place vis-?-vis all counterparts
      in each currency.

    • Figure B.2: Share of international trade in services in global GDP broken down by type (%)
      Notes: Authors? calculations using World Bank and World Trade Organization data.
    • An earlier version of this paper circulated under the title ?Currency choices and the role of the
      U.S. dollar in international services trade?.

SBA Names First American Bank Export Lender of the Year for the Second Time

Retrieved on: 
Wednesday, April 3, 2024
SBA, First American Bank, International trade, Bank, Export

CHICAGO, April 03, 2024 (GLOBE NEWSWIRE) -- The U.S. Small Business Administration’s (SBA) Office of International Trade selected First American Bank as its 2024 Export Lender of the Year.

Key Points: 
  • CHICAGO, April 03, 2024 (GLOBE NEWSWIRE) -- The U.S. Small Business Administration’s (SBA) Office of International Trade selected First American Bank as its 2024 Export Lender of the Year.
  • The three SBA export loan programs—including the Export Working Capital Program (EWCP), International Trade Loan, and Export Express Program—provide federal support to small businesses aiming to expand their operations abroad.
  • With more than a decade as a delegated EWCP lender, First American Bank’s trade finance department extensively leverages SBA export loans to fulfill customers’ export goals.
  • By working closely with small businesses to fill trade financing gaps, First American Bank earned its first SBA Export Lender of the Year honor in 2017.

WorldFirst Launches New Solution to Support Growth of UK SME’s Global Trade

Retrieved on: 
Wednesday, March 27, 2024
Professional Services, Payments, Technology, Finance, Electronic Commerce, Fintech, Digital Cash Management, Digital Assets, EMarketer, Gen, Growth, Survival, Amazon, Travel, Social media, Acquisition, Generation Z, FX, Multimedia, Export, SME, Online shopping

WorldFirst, a one-stop digital payment and financial services platform for global businesses, especially SMEs in international trade, has launched an e-commerce growth solution to help UK SMEs trade globally.

Key Points: 
  • WorldFirst, a one-stop digital payment and financial services platform for global businesses, especially SMEs in international trade, has launched an e-commerce growth solution to help UK SMEs trade globally.
  • Through the solution accessible via the World Account, SMEs need just one account which has a simple set-up process to start cross-border e-commerce trade.
  • View the full release here: https://www.businesswire.com/news/home/20240326208316/en/
    Bruce Ding, General Manager of WorldFirst International Business, shares global e-commerce opportunities for UK SMEs at a WorldFirst partner conference in London, March 2024.
  • Global trade is expected to grow by 3.3% this year and retail e-commerce sales are expected to grow 8.8% over the same period.

Digital Realty to Host NVIDIA-Powered AI Supercomputer in Denmark

Retrieved on: 
Tuesday, April 2, 2024
Deep learning super sampling, H100, Digital Realty, Research, AI, DGX, Carbon, Novo Nordisk Foundation, Imagination, Investment fund, Export

The DGX SuperPOD also includes NVIDIA AI Enterprise software for pretrained models, optimized frameworks, and accelerated data science software libraries.

Key Points: 
  • The DGX SuperPOD also includes NVIDIA AI Enterprise software for pretrained models, optimized frameworks, and accelerated data science software libraries.
  • Chris Sharp, Chief Technology Officer at Digital Realty, commented, "Digital Realty is at the forefront of crafting the digital future, transcending mere infrastructure development to become architects of tomorrow.
  • We envision Digital Realty as more than a meeting place for AI; we aim to establish it as the premier nexus for private AI, where enterprises and data converge.
  • This collaboration between Digital Realty, the Novo Nordisk Foundation, EIFO, and NVIDIA marks a significant milestone in Denmark's AI research and innovation landscape.

Denmark to build one of the world's most powerful AI supercomputers, accelerating solutions to societal challenges

Retrieved on: 
Monday, March 18, 2024
Grace Hopper, Drug discovery, GPU, University, Biotechnology, Deep learning super sampling, Acceleration, H100, Business, Digital Realty, HPC, Research, AI, Deep learning, QPU, DKK, Graphics processing unit, Novo Nordisk Foundation, Ecosystem, Hopper, Safety, Investment fund, NVIDIA, Central processing unit, Government, Gefion, CPU, Export, Cryptocurrency

The collaboration is led on the Danish side by the Novo Nordisk Foundation and the Export and Investment Fund of Denmark (EIFO).

Key Points: 
  • The collaboration is led on the Danish side by the Novo Nordisk Foundation and the Export and Investment Fund of Denmark (EIFO).
  • "Drug discovery, disease diagnosis, and treatment, as well as complicated life science challenges, are examples of areas where extreme AI computing power can enable the positive transformation of our society.
  • The collaboration with NVIDIA and the resulting national AI innovation centre can help Denmark's brilliant researchers and innovators rise to the next level."
  • "Our government is committed to enhancing Denmark's global standing when it comes to cutting-edge technology alongside our unparalleled data resources.

Denmark to build one of the world's most powerful AI supercomputers, accelerating solutions to societal challenges

Retrieved on: 
Monday, March 18, 2024
Grace Hopper, Drug discovery, GPU, University, Biotechnology, Deep learning super sampling, Acceleration, H100, Business, Digital Realty, HPC, Research, AI, Deep learning, QPU, DKK, Graphics processing unit, Novo Nordisk Foundation, Ecosystem, Hopper, Safety, Investment fund, NVIDIA, Central processing unit, Government, Gefion, CPU, Export, Cryptocurrency

The collaboration is led on the Danish side by the Novo Nordisk Foundation and the Export and Investment Fund of Denmark (EIFO).

Key Points: 
  • The collaboration is led on the Danish side by the Novo Nordisk Foundation and the Export and Investment Fund of Denmark (EIFO).
  • "Drug discovery, disease diagnosis, and treatment, as well as complicated life science challenges, are examples of areas where extreme AI computing power can enable the positive transformation of our society.
  • The collaboration with NVIDIA and the resulting national AI innovation centre can help Denmark's brilliant researchers and innovators rise to the next level."
  • "Our government is committed to enhancing Denmark's global standing when it comes to cutting-edge technology alongside our unparalleled data resources.

Helping Canadian creative businesses and organizations achieve financial success on the world stage

Retrieved on: 
Monday, March 11, 2024
Government, Organization, Environment, Perception, Travel, Quarter, City, POP, Ecosystem, Creativity, Export, Tourism

SAINT-JEAN-SUR-RICHELIEU, QC, March 11, 2024 /CNW/ - The Government of Canada is committed to helping Canadian creative businesses and organizations enhance their visibility and increase their export profits in global markets.

Key Points: 
  • SAINT-JEAN-SUR-RICHELIEU, QC, March 11, 2024 /CNW/ - The Government of Canada is committed to helping Canadian creative businesses and organizations enhance their visibility and increase their export profits in global markets.
  • This support helps Canadian companies and organizations grow their business and achieve financial success abroad.
  • This includes support for 8 creative businesses and organizations from equity-deserving communities and 1 Indigenous business.
  • Since its launch in 2018, Creative Export Canada, under the Export-Ready Stream, has invested $51.7 million in 116 export-ready projects from 103 creative industry businesses and organizations.

Yara Growth Ventures invests in Dynelectro – an innovation leader in electrolysis technology for low-cost renewable hydrogen.

Retrieved on: 
Friday, March 8, 2024
SOE, Heinz, Export, Investment fund, Electrolysis, Hydrogen, Renewable energy

Yara Growth Ventures invests in Dynelectro, who develops technologies to unlock the potential of solid oxide electrolysis (SOE).

Key Points: 
  • Yara Growth Ventures invests in Dynelectro, who develops technologies to unlock the potential of solid oxide electrolysis (SOE).
  • While SOE yields the highest possible efficiencies to produce renewable hydrogen and e-fuels, it has been suffering from system lifetime issues up to now.
  • The investment is part of Yara’s ambition to decarbonize fertilizer production and enable the hydrogen economy.
  • Investing in companies like Dynelectro realizes that strategy by supporting new technologies for the production of affordable low-emission end products.

Hand in hand with PROCOMER, 15 Costa Rican companies will participate in the most important trade fair for fresh produce

Retrieved on: 
Thursday, February 8, 2024
Agriculture, SAN, FDI, Food industry, Fruit, Catalog, Export, Golden Sweet, Coffee, Environment, Trade, Chocolate, Ginger, Investment

SAN JOSÉ, Costa Rica, Feb. 8, 2024 /PRNewswire/ -- 15 Costa Rican fresh produce companies will participate in what is considered the main event globally for the sector, in order to position their major export catalog.

Key Points: 
  • SAN JOSÉ, Costa Rica, Feb. 8, 2024 /PRNewswire/ -- 15 Costa Rican fresh produce companies will participate in what is considered the main event globally for the sector, in order to position their major export catalog.
  • It is the Fruit Logistica trade fair, which will take place from February 7 to 9, 2024 in Berlin, Germany.
  • "The Fruit Logistica 2024 trade fair is a new opportunity to continue positioning our diverse offering of fresh produce in the world.
  • Furthermore, attendees at the trade fair will taste Costa Rican coffee and a variety of dishes cooked with fresh produce on display in the pavilion.

Israel isn’t complying with the International Court of Justice ruling — what happens next?

Retrieved on: 
Tuesday, February 6, 2024
Policy, Lead, Travel, Genocide, United Nations Security Council, Refugee, Hamas, ICJ, UNRWA, International, Assault, OCHA, Social media, Fresh water, Apartheid, International law, United, United Nations, Global Affairs Canada, White, UN, Hope, International court, Complicity, Near East, Violence, Export, Seawater, European, Genocide Convention, Organization, Geneva Conventions

More than a week has passed since the International Court of Justice (ICJ) mandated provisional measures against Israel following South Africa’s accusation of genocide.

Key Points: 
  • More than a week has passed since the International Court of Justice (ICJ) mandated provisional measures against Israel following South Africa’s accusation of genocide.
  • It must also report back to the court within a month on the implementation of these measures.

No adherence

  • According to the Health Ministry in Gaza, more than 27,000 Palestinians have now been killed and more than 66,000 injured since the Hamas attacks against Israel on Oct. 7, 2023.
  • Israel has also targeted several medical facilities in Gaza, including Nasser hospital, since the ICJ ruling.
  • The United Nations Office for the Coordination of Humanitarian Affairs (OCHA) called Rafah a “pressure cooker of despair.”

In direct contravention

  • Such action would be in direct contravention of ICJ’s explicit order that Israel ensures basic services and humanitarian aid reaches civilians in Gaza.
  • These developments underscore the gravity of the conditions in Gaza following the ICJ ruling, and highlight the urgent need for Israel to comply with the orders.

What’s next?

  • Nonetheless, the ICJ ruling sends a clear message to the international community, especially to states allied with Israel, reminding them of the collective responsibility to respect and uphold international law.
  • As such, the implications of the decision extend well beyond the immediate parties involved.
  • It raises concerns about Canada’s military exports, especially the $21 million of military equipment sent to Israel in 2022.

The Global South strikes back?

  • In a broader context, the ICJ’s involvement represents an example of the Global South striking back, as international law expert Heidi Matthews argues in her podcast.
  • South Africa’s historical fight against apartheid has made the Palestinian cause resonate for South Africans, lending credibility and moral weight to its case against Israel.
  • Nonetheless, despite the hope that the Global South may begin to effectively hold powerful nations to account, the international reaction to the ICJ ruling has been notably ambivalent.
  • But the specifics haven’t been disclosed, and there are few other organizations with the expertise and infrastructure to meet the needs of Palestinians in Gaza.

Upholding international law

  • The ICJ ruling calls for urgent action, not just from Israel, but also from the wider international community — including Canada — to uphold the tenets of international law and support humanitarian efforts.
  • Global Affairs Canada recently stated on social media that “Canada rejects any proposal that calls for the forced displacement of Palestinians from Gaza and the establishment of additional settlements.
  • The world is watching, and Canada’s actions now must showcase its commitment to justice, human rights and the rule of law.


Basema Al-Alami does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.