Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

The Relationship Between Cryptocurrencies and Official Arabian Currencies Exchange Rate

Author(s): Khaled L. AL-Naif

The purpose of this study is to investigate the relationship between the exchange rate returns of the top three cryptocurrencies (Bitcoin, Ethereum and Ripple) and eight of Arabian currencies, namely; Egyptian Pound, Iraqi dinar, Lebanese Lira, Moroccan Dirham, Omani Riyal, Qatari riyal Saudi Arabian Riyal, and Tunisian Dinar, against US dollar. Daily exchange rate closing price (against US$) data for the chosen sample in the period between 1st of Jan 2017 and 1st of Jan 2020 were obtained from different sources. To analyze these data, several statistical methods have been used, such as multiple regression analyses, unit root test, and correlations. The results indicated that, (with the exception of Lebanese Lira with Bitcoin and with Ripple, Moroccan Dirham with Ethereum, Iraqi dinar with Ripple), there were no significant relationships between the Arabian currencies and cryptocurrencies exchange rate. On the other hand, the results showed a significant positive relationship between Bitcoin, Ethereum and Ripple. Finally, the study concluded that, since there was a negative relationship between Iraqi dinar and Ripple, the former can benefit in hedging and diversification. The study also concluded that Arabian countries exchange markets do not highly affect the cryptocurrencies markets, which may be due to the absence of legal recognition by governments besides the absence of the public acceptance for such currency.