This study aims to highlight the importance of adopting an exchange rate policy that contributes to the stability of the macroeconomic variables under consideration in the context of free foreign trade(trade openness). One of the most important recommendations of the study is to peg the Iraqi dinar’s exchange rate to a basket of foreign currencies not just the dollar to avoid rising inflation rates and the collapse of the local currency’s purchasing power.

The researcher also recommended the need to work on increasing non-oil imports by developing all economic sectors, including the oil sector, to avoid further financial shocks and deficits that may affect the general budget, which relies heavily on oil revenues that are often subject to fluctuations in global oil prices.

At the conclusion of the study, a set of findings was established that may help shed further light on the current research topic, leading to the proposal of a series of recommendations that could contribute to correcting some of the imbalances in the Iraqi economy that constitute an obstacle to trade liberalization.

Exchange Rate, Macroeconomic Stability, Foreign Direct Investment, Inflation

First. Arabic Sources:

Muhammad Ahmad and Ahmad Fathi Khalil Al-Khadrawi, International Economics, Faros Scientific Publishing and Distribution, Mecca, 2017, 302.

Emad, Omar Mahmoud Ali Al-Hindawi, (2011), The Relationship Between Exchange Rate Regimes and the Performance of the Egyptian Economy, Egypt, PhD thesis, unpublished, Specialization in Philosophy of Economics, Department of Economics, Faculty of Commerce, Zagazig University, p. 61.

Haider Hussein Al-Ta’ma, “Observations on the Dollar Exchange Rate,” article published on the website of the University of Karbala, Faculty of Management and Economics, 2022.

Central Bureau of Statistics and the Central Bank’s annual financial reports for various years.

Central Bureau of Statistics, Annual Statistical Compilation (2022), 3.

Iraqi Ministry of Planning, Central Bureau of Statistics, National Accounts Directorate, 2022: 9.

Samuelson and Nordhaus, Economics, Lebanon Publishers, Arab Press, Beirut, 2006, 451.

Magdi Mahmoud Shehab, Contemporary International Economics, Dar al-Jami’ah al-Jadidah, Al-Azhar, Egypt, 2007: 258.

Second. Foreign Sources:

Christopher D. Piros, Jerald E. Pinto. (2013). Economics for Investment Decision Makers: Micro, Macro, and International Economics, (1st ed.), New Jersey, USA, CFA Institute Investment Series, John Wiley & Sons, Inc., Hoboken. p. 40.

Robert J. Gordon, Macroeconomics, Eleventh Edition, Pearson Addison Wesley, 2009, U.S.A., p. 272.

Third: Websites:

https://economictimes.indiatimes.com/definition/exchange-rate

https://corporatefinanceinstitute.com