Determinant Factors of Exchange Rate in Iran with Focus on Economic Sanctions

The main purpose of this paper is description of determinant factors of exchange rate in Iran. We used Stepwise Lease Square to know possible factors that affect exchange rate in the period of 1357-1396. Then, we used econometric methods to estimate long-run relationships among variables. The results verify in the long-run, the relationship among nominal exchange rate and government expenditure, oil revenues and net export is negative and significant, while interest rate, GDP, difference in domestic and foreign inflation, and budget deficit have positive and significant effect on nominal exchange rate. In addition, the economic sanctions in 1391 have notable effect on nominal exchange.