The shekel is again strengthening today against the dollar and is weakening against the euro despite the intervention of the Bank of Israel yesterday in purchasing tens of millions of dollars in foreign currency to weaken the shekel. In late morning inter-bank trading, the shekel was down 0.31% against the dollar from yesterday's representative rate at NIS 3.805/$, and up 0.11% against the euro at NIS 4.098/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.261% today compared with Friday's rate at NIS 3.817/$, and the representative shekel-euro rate was set up 0.274% at NIS 4.093/€.
FXCM Israel said in its morning survey, "After a most volatile day yesterday, during which the shekel-dollar exchange rate dipped as low as NIS 3.79/$, it has firmed up somewhat above NIS 3.80/$, which is a key level here and closing the day under that rate could hasten the fall further. Meanwhile, the attempt to break below that level has failed. What pushed the dollar down was the clear defeat of the Italian Prime Minister in the referendum and his immediate resignation. The concern is that Matteo Renzi's defeat will strengthen the anti EU parties in Italy. The coming year will be stormy throughout Europe with elections in the Netherlands and three key countries - Germany, France and Spain. The fear is that following Brexit and Trump's victory in the US, this new round of elections will strengthen nationalist forces, which support weakening the EU and this will see the EU gradually crumble. These concerns will weigh heavily on the euro in the coming months. Regarding the dollar, despite its sharp depreciation in recent days, this is still seen as a correction of the appreciation following Trump's victory. As we approach the date of the US Fed's interest rate decision in the middle of the month, we will likely again see traders take advantage of the low value of the greenback to increase their long positions on the dollar."
Published by Globes [online], Israel business news - www.globes-online.com - on December 6, 2016
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