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Takatoshi Ito, Satoshi Koibuchi, Kiyotaka Sato, Junko Shimizu Since the collapse of the Bretton Woods system in 1971, Japanese firms’ profits have fluctuated with volatile exchange rate movements. From the early 1970s to the mid-1990s, the yen appreciated steadily, especially after the Plaza Accord in 1985. Japanese exporting firms have had to cope with large fluctuations within a yen appreciation trend. They have adopted various defensive measures. The use of financial instruments such as forward transactions proved to be effective only in the short run. Invoicing exports in yen should protect Japanese exporters’ income, but importers may not agree to the arrangement. Trade conflicts incentivised exporters to set up ‘assembler subsidiaries’ in foreign countries, and this proved to be an effective hedging operation against currency fluctuations. Japanese exporters have developed sophisticated currency risk management methods since the 2000s, when the overseas production rati

United kingdomRepublic ofEdward elgarInternational currencyExchange rate exposureMinistry of economyExchange rateResearch institute of economyBusiness activitiesEuropean commissionA survey data analysis of invoicing currenciesInternational economiesExchange rate risk managementA firmBretton woodsPlaza accord