Rouhani met Thursday in Tehran with the Iraqi prime minister. Rouhani was quoted by the official Islamic Republic News Agency as describing bilateral ties as "strategic."
Iran and Iraq have moved closer in the years since the U.S.-led invasion of Iraq in 2003. Several of Iraq's Shiite political and religious leaders have strong ties to Iran.
Rouhani said his government was eager to implement the terms of 1975 Algiers Accord, an agreement meant to settle bilateral border demarcation disputes. Five years after the agreement was signed, Iraq invaded Iran in an effort to control key oil interests in the region.
Iran's Supreme Leader Ali Khamenei said Thursday there was no barrier to further expansions in Iran's bilateral ties with Iraq.
Rouhani said Iran under his leadership would play a more constructive role in international affairs. Since taking office in August, his government reached a landmark nuclear deal with Western governments.