The impact of exchange rate fluctuations on the trade balance in Iraq for the period from 2004 to 2022

Abstract

The research was concerned with explaining the fluctuations that occur in the exchange rate and the extent of their impact on the trade balance of Iraq, by analyzing the structure of the Iraqi trade balance, both parts (exports and imports), for the period from (2004 to 2022), and then testing the effect of the exchange rate on the movement of Iraq’s foreign trade, represented by its trade balance. Two analyzes were conducted. The first was a descriptive analysis of the movement of both Iraqi exports and imports during the years of the study. The second analysis was a standard analysis of the study variables, where the exchange rate was chosen (as an independent variable) and both exports and imports (dependent variables). Accordingly, the researcher reached a set of conclusions, the most important of which was that the effect of the exchange rate varies from one country to another, depending on the nature of the country’s economy, and oil exports constituted a very large percentage of Iraq’s total exports, and this made the exchange rate tool less important in influencing the movement of Iraqi exports. Based on those conclusions that were reached, the research was concluded with a set of recommendations, the most important of which was the necessity of pricing exchange rates at a fair price so that it is realistic and reflects the forces of supply and demand, thus identifying the real economic position of Iraq so that it is possible to know its strengths and weaknesses. Work must also be done to diversify Iraq's exports of goods and not depend almost entirely on oil if the monetary and financial policy tools are to work well and achieve the goals set for them.