Measuring and Analyzing the Impact of the Dollar Exchange Rates on Foreign Trade in Iraq For the Period (2005-2015)

Abstract

The exchange rate policies are one of the economic policies used in the management of the Iraqi economy, because of their effects on most internal and external variables, including foreign trade. The aim of the research is to determine the impact of the change in the dollar exchange rate and its impact on foreign trade in Iraq during the period (2005-2015), and the sale and purchase of foreign currency by the Central Bank of Iraq in commercial auctions with commercial banks which started in 2003 based on the floating system . The analytical side of the research found that there is an inverse relationship between the exchange rates of the dollar and foreign trade, and the results of the statistical test Pearson showed that the reference between the official exchange rates and the foreign trade of Iraq is negative, which means that the correlation between them is inverse, and the correlation strength was (-0.717) which is highly and morally correlated. The results of the standard analysis showed that the increase in nominal exchange rates in one unit, with the stability of other factors, would contribute to the reduction of foreign trade (3.7 million dollars), and that the increase in parallel exchange rates in one unit and the stability of other factors will contribute to reducing Foreign trade (0.003) million dollars. With regard to exports, the research recommended the need to find an alternative to oil exports and diversify the sources of income by expanding the economic base and establishing the foundations of a real economy that consists of a productive and financial base that contributes to finding other sources of income alongside oil. Imports should be reduced by encouraging local industries To promote the establishment of small and medium enterprises, and to carry out radical reforms of the Iraqi banking sector so that foreign investors can find banks that operate in the same manner as in a market economy.