50-60 percent of international trade involves bilateral “trade credit” extended by the exporter to the importer or vice versa, and 60-70 percent of it is denominated and settled in currencies that are foreign to either of them. FX-denominated trade, in turn, exposes these firms to exchange...

This paper examines how China's exports are affected by exchange rate shocks from countries who supply intermediate inputs to China. We build a simple small open economy model with intermediate goods trade to show that due to the intraregional trade in intermediate goods, a devaluation of other...