Impact of Iraq’s Dinar Exchange Rate Fluctuation on Iraq’s Trade Balance for The Period 2005–2023
DOI:
https://doi.org/10.71207/ijas.v21i86.4175Keywords:
Iraq dinar exchange rate, Trade balance impact, Exchange rate fluctuation, Import-export dynamicsAbstract
The research investigates the relationship between fluctuations in the Iraqi dinar exchange rate and the trade balance of Iraq from 2005 to 2023. The research aims to answer whether changes in the value of the dinar against the US dollar have affected Iraq's import and export performance. The research uses different quantitative econometric techniques (Unit Root Tests, Correlation Analysis, Granger Causality Analysis, Johansen Co-integration Analysis and the Autoregressive Distributed Lag (ARDL) model). Data is collected through annual data from reliable sources, namely the Central Bank of Iraq, the World Bank and Macrotrends. The research finds substantial long-run relationship between fluctuations in the exchange rate and the trade balance. An appreciation of the dinar could lead to a worsening of the trade balance and depreciation may lead to a short-term improvement of the trade balance which is a reflection of oil export dependency and the extent of limited diversification of the non-oil economy. It demonstrates the significance of conducting stable exchange rate reform and diversification of exports to improve trade performance. The research has important implications for policymakers who aim to mitigate the adverse effects of fluctuation of exchange rate policies on Iraq's external sector and overall economic stability.
Downloads
References
1. Abed, I. A. (2023). Analysis of Foreign Trade Movement and its Impactin Exchange Rate Dinar the Iraqi for the Duration (2004-2021). Asian Journal of Economics, Business and Accounting, 23(22), 248–263.
2. Aghion, P., Bacchetta, P., Rancière, R., & Rogoff, K. (2009). Exchange rate volatility and productivity growth: The role of financial development. Journal of Monetary Economics, 56(4), 494–513.
3. Akighir, D. T. (2023). Foreign Exchange Market Pressure, Exchange Rate and Trade Balance in Nigeria: Is There Evidence of the J-Curve Effect? Journal of Developing Economies, 8(2), 340–363.
4. Ben Doudou, M., Nouira, R., Saafi, S., & Belhadj, A. (2022). Do exchange rate changes have threshold effects on the trade balance? Evidence from Tunisia. Economic Change and Restructuring, 55(1), 511–537.
5. Chandra Majumder, S., Nasir Hossain, M., & Hasanur Rahman, M. (2020). The Impact of Exchange Rate Volatility on Export and Import in Bangladesh The Impact of Exchange Rate Volatility on Export and Import in Bangladesh imply the. European Online Journal of Natural and Social Sciences, 9(2), 411–424.
6. Effect of Exchange rate and trade. (n.d.).
7. Houfi, M. A. (2023). The impact of exchange rate changes on the trade balance: Evidence from Saudi Arabia vs her major trading partners. International Journal of Applied Economics, Finance and Accounting, 16(1), 43–55.
8. Ismael, A., Al, A., Al Nasrawi, M., Hussein, F., & Alsaffar, A. (n.d.). The Impact Of Exchange Rate On The Iraq Trade Balance Standard Study Using Autoregressive Distributed Lag Model(ARDL) For The Period (2004-2022).
9. Jiang, W., & Liu, G. (2023). The asymmetric impact of exchange rate changes on bilateral trade balance: evidence from China and its trade partners. Economic Research-Ekonomska Istrazivanja , 36(2).
10. Keho, Y. (2021). REAL EXCHANGE RATE AND TRADE BALANCE DYNAMICS IN COTE D’IVOIRE. International Journal of Economics and Financial Issues, 11(1), 61–70.
11. Khouiled, B., Chini, S.-E., & Benrouina, M. (2023). Dynamic relationship between exchange rate and trade balance. SocioEconomic Challenges, 7(3), 164–173.
12. Knežević, V., & Penjišević, A. (2021). The influence of the exchange rate on the trade balance of Serbia. Ekonomika, 67(3), 93–105.
13. Kurtović, S. (2017). The Effect of Depreciation of the Exchange Rate on the Trade Balance of Albania. Review of Economic Perspectives, 17(2), 141–158.
14. Latif Majee, H. (2023). Analyzing and Measuring the Impact of Exchange Rate Fluctuations on Economic Growth in Iraq for The Period (2004-2022). Journal of Kurdistani for Strategic Studies, 2.
15. Limbore, N. V. (2019). IMPACT OF EXCHANGE RATES ON BALANCE OF PAYMENT OF INDIA.
16. Nguyen, N. M. (2018). The Impact of Real Exchange Rate to Trade Balance in Vietnam. SSRN Electronic Journal.
17. Odo, S., Ogbonna, B. C., Charity Ifeyinwa, A., Idenyi, O. S., & Bigben, O. (n.d.). Effect of Exchange Rate Depreciation on Trade Balance in Nigeria. Effect of Exchange Rate Depreciation on Trade Balance in Nigeria.
18. Osei-Gyebi, S. (2021). How Exchange Rate Changes Affect Trade Balance in Ghana Journal of Economics and Financial Analysis. Journal Homepage: Ojs.Tripaledu.Com/Jefa S. Osei-Gyebi / JEFA, 5(2), 43–62.
19. Qasim Hasan, M. (2016). Estimating and Analyzing the Impact of Some Economic Variables on the Fluctuations of Iraqi Dinar Exchange Rate during the Period (1995-2015).
20. Rifa Fuard, Aft., Fathima Rinosha, K., Fathima Thahara, A., & Jawahir FATHIMA SHIFANIYA, A. (2021). The Relationship between Exchange Rate and Trade Balance: Empirical Evidence from Sri Lanka. Journal of Asian Finance, 8(5), 37–0041.
21. Riyadh, H. A., Sultan, A. A., Abdurahim, A., & Sofyani, H. (2020). The effect of Iraq’s dinar exchange rate against UK pound on Iraq’s export to UK. In Journal of Critical Reviews (Vol. 7, Issue 2, pp. 51–55). Innovare Academics Sciences Pvt. Ltd.
22. Sadok, H. (2018). The Effect of Exchange Rates on Trade Balance: An Empirical Study of Morocco. GATR Journal of Business and Economics Review, 3(1), 01–10.
23. Salal, M., Maiamisalalsahebalshukri, A. P. D., Al Huda, N., & Ali, H. (2004). The Impact of Exchange Rate Changes on the Balance of Payments in Iraq for the The Impact of Exchange Rate Changes on the Balance of Payments in Iraq for the Term (2004-2020). In SPECIALUSIS UGDYMAS / SPECIAL EDUCATION (Vol. 2022, Issue 43).
24. Saqib, N. (2018). The Effect of Exchange Rate Fluctuation on Trade Balance: Empirical Evidence from Saudi Arab Economy. SSRN Electronic Journal.
25. Shen, Q., Orach, H., Chen, P., Wei, S., Ssewajje, H., & Rose, W. (2021). EFFECT OF EXCHANGE RATE VOLATILITY ON UGANDA’S TRADE BALANCE. Advances in Social Sciences Research Journal, 8(5), 532–574.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Nabard Abdallah Sharif , Aryan Omar Mohammed, Hardi Gharib Ahmed
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Authors retain the copyright of their papers without restrictions.
