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Every economy in the world is characterized by its adoption of a specific interest rate, as well as its own exchange rate, according to its capabilities and degree of development. Therefore, these two variables are the tool for linking the value of goods, assets, and wages in the local markets, and their counterparts in foreign markets, and through them many relationships arise. International, the most important of which is the possibility of directing and transferring capital to one country and not another, as these two variables (interest rate, exchange rate) have a direct role in international transactions. Through the interaction of the interest rate and the exchange rate, we have an economic relationship that has a direct impact on the flow of foreign investments between countries. Therefore, these concepts and their relationship to the overall economy and what are the most prominent factors affecting them will be discussed. The study sought to demonstrate the impact of these two variables on the Iraqi economy through the research objective. The research aims to describe and analyze the paths of interest rates and exchange rates during the period (2004 - 2020) in order to determine their behavior during the research period. The most prominent conclusions reached by the research were that the exchange rate is considered a measure of international competitiveness, which exerts a major influence on the local economy, as does the interest rate, as it reflects the economic position in general, and commercial position in particular, because it represents the linking tool through which prices are determined. The relative proportion of local goods to foreign goods. That is, it is the linking tool through which the purchasing power of the local currency is determined against other foreign currencies, as the local currency is considered a commodity, and the foreign currency is its monetary price. The research concluded with a set of recommendations, the most important of which was in order to encourage investment instead of the Iraqi investor’s tendency to invest in foreign currencies, work must be done to activate the interest rate in Iraq
Surgi et al. (Thu,) studied this question.