Abstract:
Abstract: The study aims to know the impact of the foreign exchange rate in inflation, which is
reflected in the economic conditions, the high general level of prices, economic instability, high
inflation rates, and price instability. The study adopted the econometrics historical statistical
descriptive approach E- views 10, the method of least squares (O.L.S), co- integration, Granger's
causal relationship and the use of ARDL. The study also found out the most important results:
There is a direct relationship between the foreign exchange rate and inflation, so that the higher
the foreign exchange rate, the higher the rates of inflation automatically and directly. The study
proved that there is an impact of exchange rate fluctuations on the gross domestic product (GDP).
The study also recommended the following: Continuing to adopted the policy of the managed
flexible exchange rate to eliminate the parallel market, and to strengthen and support the official
market. Attracting the savings of workers abroad, encouraging them and tempting them with
remunerative prices. Attracting capital abroad and encouraging foreign direct and indirect
investment by simplifying procedures, unifying the investment window, and facilitating transfer
procedures. The authorities should find a mechanism to reduce inflation rates and adopt a flexible
and balanced monetary policy. Maintain reserves of foreign exchange.
Key words: fluctuations, foreign exchange rate, inflation, ARDL model
