U.S. Dollar Dominance and the Role of Local Currency Settlement Framework: Evidence from Thai Exports

Despite growing efforts to promote local currency use in international trade, the U.S. dollar continues to dominate Thai export invoicing, accounting for roughly 75–80% of export transactions between 2007 and 2024. A gradual increase in baht invoicing has nevertheless emerged, particularly in sectors such as automotive manufacturing. Dollar invoicing remains driven by firms’ reliance on imported inputs, industry-wide invoicing practices, and persistent currency-use habits. The Local Currency Settlement Framework (LCSF) with Indonesia and Malaysia has contributed to a modest reduction in dollar reliance, although its impact varies across firms and industries. Limited evidence suggests that firms’ dollar-denominated debt influences export invoicing decisions, indicating a disconnect between trade operations and financial hedging strategies.

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