Invoicing Currency Choice under the Dominant Currency Paradigm

The leading position of US dollar as a vehicle currency of international trade has established since 2010. In this paper, I explore shifts of dollar dominance in post-pandemic periods and the roles and invoicing choices of other major currencies. I find that (i) The dominant role of US dollar is consistent in post-COVID periods; (ii) global prices show stronger contemporaneous responses to exchange rate shocks at monthly frequency; (iii) trade prices and volumes respond more quickly and intensively to dollar exchange rate shocks; (iv) there are regional dominant currencies that dominate US dollar in their territory, and major driving forces of invoicing choices in regional-dominant currencies are trade closeness and foreign market shares.