The Impact of Oil Prices on Foreign Reserves and Exchange Rates in Iraq During The Period (2012-2022)

Abstract

The aim of the study investigates the, impact of oil prices at the international level on exchange rates And foreign reserves in Iraq for the duration (2012-2022). Its importance lies in studying the issue of developments in international oil prices and their impact on exchange rates and foreign reserves, due to the importance of international oil prices to the Iraqi economy. The study focuses on the sharp fluctuations in crude oil prices, which caused major economic problems and challenges for the Iraqi economy during the period (2014-2020), as well as affecting the exchange rates and foreign reserves. This study aims to examine and analyze the impact of oil prices on foreign reserves and exchange rates in Iraq during the research period. It is based on the hypothesis that there is a positive relationship between oil prices and indicators of the exchange rate and foreign reserves in Iraq, as the higher the oil prices, the higher these indicators will be with positive values, and vice versa. It adopts The method is analytical and descriptive for analyzing statistical data and financial and economic indicators in order to obtain and analyze results. It reveals a significant decrease in oil prices during the year 2020 from (64) dollars per barrel in 2019 to (41) dollars per barrel in 2020, with a decrease rate of (-34%), as a result of termination procedures witnessed by the international markets due to the spread of Corona virus. The results also show that the exchange rates of the US dollar against the Iraqi dinar fluctuated between increase and decrease in the official and parallel prices result of the drop-in oil prices. has decided to raise the official exchange rate from (1182) in 2019 to (1460) in 2020. In addition, there was decrease in the volume of foreign reserves at the Central Bank of Iraq as a result of the drop. Hence, Iraq’s total foreign exchange reserves have decreased. Finally, the study shows an increase in Iraqi foreign reserves during the years 2021-2022, reaching (100) billion dollars at the end of 2022, , in addition to the policy of the Central Bank of Iraq to raise prices of exchange to confront currency trafficking and money laundering.