Exchange rate fluctuations and their impact on macroeconomic variables

safiallah bakhshali¹

1) PhD student of International Economics,Imam Ali Academic Staff Member

IOI Code : XBEC-EADZH
Publication : 2nd International Conference on Management, Accounting, Economics & Banking in the Third MIillennium(mae2019.ir)
Abstract :
    The exchange rate is a key variable that failing to properly manage can create problems for the economy of any country in a variety of dimensions that the Iranian economy is no exception to. The exchange rate reflects the economic conditions of the country and is a factor in comparing the national economy with that of other nations. In the meantime, policymakers in that country will adopt appropriate foreign exchange policies depending on the economic context of each country. In Iran, because the supply of currency is monopolized by the government and the central bank, the price of the currency is not necessarily determined by supply and demand. Increasing oil revenue raises government foreign exchange earnings, and thus, currency prices are not a sign of the real potential of the Iranian economy and impose a set of artificial prices on the economy. Exchange rate fluctuations affect the growth of production and demand in the country and some other variables, as today the optimal and optimal rate of volatility is discussed. Therefore, the choice of currency policies according to the economic conditions, so as to lead to the establishment of an appropriate exchange rate system, can not only be a way of achieving growth and development, but will in turn affect other macro factors. In the economy, due to the complexity of the relationships between variables as well as temporal and spatial conditions, there is less of a complex global version that seems to be missing the link between exchange rate and national production and employment, trade balance, inflation, capital market and economic growth.

Keywords : exchange rate trade balance inflation national production capital market