his research paper investigates the distinction between the nominal exchange rate and the real exchange rate, highlighting their insinuations for economic policies and export dynamics in Iraqi economy. The nominal exchange rate measures the relative price between two different currencies, defined as the number of domestic currency units required to purchase one unit of a foreign currency. While the real exchange rate is considered as a relative price of non-tradeable goods against tradable goods. The research paper also analyses numerous indices for evaluating the real exchange rate, recognizing the most appropriate method for the Iraqi economy. Moreover, the key roles of money supply and oil revenues in determining the exchange rate dynamics are considered. Given the dominance of oil sector in the Iraqi economy, its far-reaching effect on macroeconomic circumstance, including the exchange rate, is thoroughly tested. This study delivers a comprehensive outline for empathetic the interaction between exchange rates, money supply, government expenditure and monetary policies in a resource-dependent economy.
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