The Impact of Foreign Exchange rate Fluctuations in Inflation using the ARDL model Applied study- Sudan during the period (1979 - 2017)

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