The Impact of Exchange Rate Fluctuations on Iraq's Imports from Iran for the period 2004-2023

Abstract

Exchange rate fluctuations are among the economic factors that directly affect foreign trade, as they influence import and export costs, thereby impacting a country's trade balance. This impact is particularly significant in Iraq due to its heavy reliance on imports to meet domestic market needs, in light of weak productive sectors and the lack of adequate protection for emerging industries. This study aims to analyze and measure the impact of exchange rate fluctuations on Iraq's imports from Iran during the period (2004–2023). To achieve this objective, the study adopts both the descriptive analytical method and the econometric approach, relying on secondary data for the specified period. The EViews 12 software was used to estimate the economic models through the application of the Autoregressive Distributed Lag (ARDL) model to analyze the relationship between variables in both the short and long term. The study concludes with a set of findings and recommendations, the most important of which is that Iraqi imports from Iran experienced overall growth despite fluctuations, reflecting the strength of economic ties between Iraq and Iran. Moreover, economic and political crises had a significant impact on the volume and percentage of imports. The study recommends the need to coordinate monetary policy with fiscal policy to maintain the high value of the Iraqi dinar against foreign currencies, thereby enhancing purchasing power and preserving balance in the balance of payments.