We study exchange-rate pass-through and currency choice in international transactions, focusing on bilateral bargaining power in relationships between domestic buyers and foreign suppliers. Using detailed transaction-level data on Swiss imports from 2014?2023 identifying buyers and suppliers, we show that exchange rate pass-through is lower for economically important suppliers within a buyer's network. This pattern is explained by a higher likelihood of invoicing in the buyer's currency, consistent with a bilateral bargaining model of price setting and endogenous currency choice. Our results imply that bilateral bargaining power shapes how foreign shocks affect prices and external adjustment, making policy transmission network dependent.

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19 February 2026     Paper Number CEPDP2154

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This CEP discussion paper is published under the centre's Trade programme.