Exchange rates, invoicing currencies and the margins of exports

•We estimate impacts of exchange rate depreciation on exports by large firms in South Korea along both intensive and extensive margins, using annual data.•Our measurement of multilateral real exchange rate is adjusted for trade invoicing currencies.•For the intensive margin, the contractionary effect of imported input cost channel is larger than the expansionary effect of price competitive channel.•For the extensive margin, exchange rate depreciation is found to increase the probability of exporting. We examine effects of currency depreciation on South Korean exporting firms, taking into account invoicing currencies in international trade. Such effects on real exports (intensive margin) and the probability of exporting (extensive margin) are decomposed into invoice-currency adjusted improved price competitiveness, increased costs of imported inputs, and increased burden of foreign-currency debts. We find strong evidence that currency depreciation affects both margins through price competitiveness, and invoice currencies play an important role in explaining such effects. However, evidence for impacts of currency depreciation via the costs of imported inputs and the burden of foreign-currency debt channel is weak.