Exchange Rate Impacts on Investment of Manufacturing Sectors in Iran

Abstract

As a major factor in the development process and economic policies evaluation, investment and its growth rate have been considered in many studies. This paper examines the relationship between changes in exchange rate and the investment of manufacturing sectors in Iran during1995 to 2009 using the panel data approach. So, the annual data of manufacturing sectors is used to examine the impact of real exchange rate fluctuations on industrial investment. It is found a negative and statistically significant impact of real exchange rate movements on manufacturing investment.