Measuring exchange rate flexibility and its relation to total exports and imports in Iraq for 1991 – 2016
Author: Thamer Abdui-Aaly Kadhum and Adnan Dawood M. AL-Edary
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Abstract
The exchange rate is one of the financial and monetary instruments used in directing foreign and internal economic policies because it affects macro – economic variables such as foreign trade (exports and imports), capital flows and the level of prices , By virtue of the rationalization of the Iraq economy and its almost total dependence on export revenues form crude oil , the Iraq dinar was linked to the US dollar to maintain its export revenues and pay its dues , There are many exchange rates, but what is important in this research is nominal exchange rate in both official and determined by the central bank and parallel , which is the market price , which accomplishes the informal economic transactions, before 2003, the exchange rate of the Iarqi dinar in the official market was constant and higher than its price in the parallel market which has seen a steady decline, After this date , its price in the two markets is approaching each other as a result of the policy of the central bank of Iraq (open market operations ) , which followed to the sale and purchase of the dollar, which contributed to this convergence and control of fluctuations in the exchange rate of the Iraqi dinar against the US dollar .
The analysis of the relations between the variables of the model found that the total exports is linked to a negative relationship with the exchange rate in the official market and direct relationship with price in the parallel market because most of the exports carried out by the government sector dependent on oil and most imports belong to the private sector .