The bank's model shows that the exchange rate should be around NIS 3.78/$.
Barclays Capital analysts say that the shekel has room to appreciate against the dollar, and their fair value model shows that the current exchange rate should actually be around NIS 3.78/$.
The analysts say that the recent rise in the shekel-dollar rate, which signifies a weaker shekel, is an overreaction to dollar strength on global markets.
Barclays says that the shekel is "turning a corner in terms of the fundamentals that are driving the medium term trend." The investment house expects that likely net capital inflows, and an improving economic situation in Israel, are bullish for the shekel, and Barclays also expects Bank of Israel interventions to be reduced as the economy recovers.
The representative shekel-dollar rate, which was set at NIS 4.005/$ yesterday, was NIS 3.887/$ on June 1.