Analysis of the Impact of Exchange Rate and Oil Revenue on Trade in Iran

Fatemeh Borhani¹ Mehran Mohseni²

1) Undergraduate student in Economics, University of Semnan. Email:
2) Undergraduate student in Economics, University of Semnan. Email:

IOI Code : AZGC-AZHDAA
Publication : 1St International conference on new horizons in management,business, economics and humanities(icmbe.com)
Abstract :
    The economy of Iran, as a petroleum-dependent economy, is significantly influenced by fluctuations in exchange rates. This study investigates the relationship between exchange rates, oil revenues, and trade balance in the Iranian economy, addressing key questions in this field. To achieve this, econometric methods and Eviews software were utilized to analyze data on the relevant variables over a specified time period. The findings indicate that exchange rate policies and management of oil revenues play a crucial role in improving the trade balance and ensuring economic stability. Severe fluctuations in exchange rates can lead to economic instability and negatively impact investment and domestic production. Additionally, reliance on oil revenues renders the economy vulnerable to external shocks. The results of the model demonstrate a positive and significant impact of oil revenues on the trade balance; however, despite a positive coefficient for the exchange rate variable, the results indicate that there is no statistically significant relationship between exchange rates and the trade balance. This may be attributed to the simultaneous influence of several other factors, such as trade policies, global economic conditions, and various economic variables, which have diminished the role of exchange rates in the model. Based on these results, recommendations for improving the trade balance are offered, including diversifying income sources, developing the non-oil sector, optimizing foreign reserves management, adopting appropriate exchange rate policies, and supporting non-oil exports.

Keywords : exchange rate oil revenues trade iran eviews