Shekel depreciation slows

shekel  picture: Tamar Mitzpi
shekel picture: Tamar Mitzpi

FXCM Israel: Disappointing growth figures have triggered an extreme change of sentiment on the shekel.

The sharp depreciation of the shekel in recent days slowed somewhat this morning in interbank trading. The shekel-dollar exchange rate was up 0.2% in comparison with yesterday's representative rate, at NIS 3.53/$, and the shekel-euro rate was down 0.24%, at NIS 4.69/€.

In the foreign currency market yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.523/$, up 0.571% on Monday's rate, and set the shekel-euro representative exchange rate at NIS 4.702/€, up 0.243%.

FXCM Israel research department said, "The shekel-dollar exchange rate is not stopping and yesterday almost touch NIS 3.54/$ at one point. Meanwhile, the momentum is so powerful that the shekel-dollar rate was able to pierce the major NIS 3.5/$ and NIS 3.51/$ without effort. The sharp weakening of the shekel is verging on panic selling and shows an extreme change in sentiment against the shekel and the main trigger was the disappointing growth figures published at the start of the week."

FXCM continued, "The renewal of fighting yesterday evening between Israel and Hamas and concern about an expected escalation will weigh more on the shekel. Within a few days the shekel-dollar exchange rate has given up 50% of its fall since May 2013 when it was NIS 3.72/$. While the exchange rate remains above NIS 3.515/$, the tendency is upwards although the current process prevents is almost completely weakening the shekel, in the long term matters depend mainly on the dollar's performance against global currencies. And worldwide the dollar is continuing to strengthen and yesterday reached a 9-month peak against the euro following excellent real estate market results in the US. Speculation is now strengthening that the US Federal Reserve will raise interest rates earlier than expected.

Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

shekel  picture: Tamar Mitzpi
shekel picture: Tamar Mitzpi
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