Abstract

The purpose of this study is to investigateThe impact of fluctuations in the exchange rate of the Iraqi dinar in some of the indicators of the Iraqi market for securities by using Johansen’s methodology in cointegration analysis and Granger causality, to study the nature and direction of the dynamic relationship between the exchange market and the stock market in Iraqi economy for the period (1992 - 2012), In order to take measures to reduce its negative effects on the performance of the Iraqi market for securities and take advantage of the positive features of these fluctuations, The results of the assessment revealed the presence of a statistically significant relationship between the exchange rate of the Iraqi dinar and the indicators for the Iraqi stock market during the study period. As Granger test pointed out that the causal relationship is heading from exchange rates to index market capitalization.Based on the conclusions, the researcher recommends the need to follow the fluctuations in currency exchange rates and predict future values in order to take measures to reduce the negative effects in financial market indicators and to take advantage of the positive characteristics of these fluctuations. The establishment of active and effective centers within the Iraqi market for securities allows investors to see the actions taken by the Central Bank of Iraq on the rates of exchange rates so that investors can take decisions to buy and sell securities.