Ma`rifat Eqtesadi

In this study, we will examine the effect of changing the exchange rate on the increase in the cost of imports. At the same time, we will answer the question why in Iran's economy, unlike many countries, the increase in the exchange rate as a price policy, not only did not lead to a decrease in imports, but only led to an increase in the cost of imports and, as a result, an increase in inflation. The results of the study of currency shocks during the 1970s and 1990s show that there is a weak correlation (15%) between the increase in the exchange rate and the change in the amount of imports, and conversely, there is a high correlation (88%) between the increase in the exchange rate and the increase in the cost of imports; In such a way that the policy of increasing the exchange rate in order to reduce imports has in practice led to more expensive imports and has not changed the share of different parts of imports. The results of the import price index also indicate a sharp increase in import costs at the same time as the exchange rate increases. The more expensive import also increases the producer price index (PPI) by increasing the production cost. Accordingly, due to the one-way causality from the producer price index to the consumer price index, the jump in prices becomes faster and as a result inflation increases.