Against the background of events in Greece, the shekel is mixed at the start of this week's trading on the foreign exchange market. The shekel-dollar exchange rate is currently up 0.25% in comparison with Friday's representative rate, at NIS 3.778/$, while the shekel-euro rate is down 0.27%, at NIS 4.175/€.
The result of the referendum in Greece, in which over 61% of those who voted said "No" to the further austerity program being demanded by the other eurozone countries and the IMF, means that Greece is on a collision course with its creditors, and may even leave the eurozone.
Greece is left in a chaotic situation, with a real possibility that its banking system will collapse. Without continued support from the European Central Bank or another international institution, the banks in the country will run out of cash within days, in which case the Greek government will have to announce a new currency in which to pay salaries and pensions.
Despite the 'No' vote in the referendum, for which the ruling Syriza party campaigned, Greek finance minister Yanis Varoufakis has resigned. Varoufakis said he resigend in order to pave the way to a new settlement with Greece's creditors, who did not wish to meet him.
FXCM Israel says in its market review this morning, "The trading week opens against the background of the resounding 'No' from the Greek public in the referendum on the European proposal of a new debt arrangement in return for continuation of the austerity policy. The referendum result should not, however, be interpreted as expressing a desire on the part of the Greek people to leave the eurozone. It would appear that the Greeks want to be part of the block, but not on the current austerity terms.
"The ball is now in the court of the leaders of the eurozone: Germany's Chancellor Merkel and the European Central Bank, as well as the IMF. If they choose to break off negotiations, this will be liable to lead to dangerous turmoil on the markets. If they show readiness to return to the negotiating table and conduct talks on a new arrangement, on terms more tolerable for the Greek people, this could lead to a sustainable solution. Against the background of this uncertainty, trading in the euro in the coming days can be expected to be volatile. There is no doubt that there will be heavy pressure on the euro, with investors perhaps preferring to reduce exposure to European assets until the picture becomes clearer."
On a technical level, FXCM says, the shekel-euro rate is on the point of collapse. "The uncertainty in Europe is likely to drive investors towards the safe haven of the dollar, and thus strengthen the dollar against other currencies, including the shekel. From a technical point of view, the shekel-dollar rate found strong support at NIS 3.75/$, avoided a downward breakthrough, and managed to climb upwards, so that it is now at around NIS 3.76/$. Only a move above NIS 3.8/$, however, will represent a signal for a more significant upward move."
Published by Globes [online], Israel business news - www.globes-online.com - on July 6, 2015
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