The shekel is again strengthening today against the dollar and against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate is down 0.46% against the dollar at NIS 3.678/$ and down 0.42% against the euro at 4.266/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.404% at NIS 3.695/$ from Monday's rate and set the shekel-euro rate up 0.152% at 4.284/€.
The shekel-dollar exchange rate is moving further away from NIS 3.70/$, the significant threshold that it had passed at the end of last week for the first time in 18 months.
Swedish analyst Henrik Gullberg, an analyst at Japanese bank Nomura, is not surprised by the recovery of the Israeli currency. He felt that the recent weakening off the shekel was too extreme and was influenced by seasonal factors in August and that the natural trading range for the shekel-dollar exchange rate is between NIS 3.55/$ and NIS 3.68/$.
Gullberg explains that August is traditionally a weak month for the shekel with Israelis travelling abroad in large numbers and purchasing significant amounts of foreign currency. According to Gullberg, on average in recent years the shekel has weakened by 1.82% against the dollar in August. This year the shekel already weakened by 1.5% against the dollar in July.
looking further ahead, Gullberg believes that the shekel is overvalued against the dollar by about 2%, having lost 9% of its value against the dollar since the start of 2018.
Published by Globes [online], Israel business news - www.globes-online.com - on August 8, 2018
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