Analysis and measurement of the impact of the exchange rate on the trade balance in Iraq for the period (2004-2023)

Abstract

The research aims to analyze and measure the impact of fluctuations in the exchange rate of the Iraqi dinar against the US dollar as an independent and basic variable in the Iraqi trade balance as a dependent variable, and to clarify this relationship, other secondary independent variables were used(gross domestic product, inflation, and oil prices). Therefore, a standard model was formulated to study the impact of changes in the exchange rate of the Iraqi dinar against the US dollar on the trade balance during the period 2004-2023, and the study concluded that with an increase in the exchange rate by(1%), this leads to an increase in the trade balance by(2.49%) in the short term. However, this effect decreases to(1.22%) in the long run. This may be attributed to the fact that oil exports constitute the majority of Iraqi exports, and are linked to the fluctuations of international markets and OPEC decisions, which reduces the impact of the exchange rate on the trade balance in the long run.