After beginning the day stronger, the foreign currency exchange market has flipped and the shekel is once more weakening sharply this morning in inter-bank trading against the dollar and against the euro. The shekel-dollar rate is up 1.11% at NIS 3.907/$ and the shekel-euro rate is up 0.87% at NIS 4.489/€.
Yesterday, the Bank of Israel set the shekel dollar representative rate down 0.361% from Monday's rate at NIS 3.864/$, and the representative shekel-euro rate was set down 0.175% at NIS 4.45/€.
FXCM Israel research department said this morning, "The snowball effect continues to gain momentum on the financial markets after a worrying day yesterday on Wall Street, in which, despite a positive opening, the market turned around to have the most negative day since October 2008. The fact that investors did not succeed in keeping their profits tells us about the gravity of sentiment. Even if we are not having a crisis as severe as 2008, since the global economy is better and more stable in financial terms - we can still expect a period of volatility. At the moment there is mainly panic in the market, and in that panic it is difficult to see the real fundamental situation with the question being how serious is the actual slowdown in China?"
FXCM Israel added, "Volatility in the markets continues to shake up foreign currency trading. Despite the fall on Wall Street, the lowering of the interest rate by China's central bank helped the dollar recover against other major currencies and against the shekel with the exchange rate again climbing above NIS 3.85/$. The public appearance by the Bank of Israel Governor Karnit Flug who said that negative interest rate and quantitative easing are again on the agenda, has weighed on the shekel. There is one key question on the global foreign exchange market - will the current turbulence delay the US Fed's interest rate hike or not? As the turmoil extends closer to the start of September, so the likelihood of a postponement increases."
Published by Globes [online], Israel business news - www.globes-online.com - on August 26, 2015
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