The shekel is again strengthening against the dollar and is flat against the euro in inter-bank trading this morning, continuing last week's trend. The shekel remains firm despite yesterday's disappointing growth data, which showed that the Israeli economy grew by only 2.5% in the first quarter of 2015.
The shekel-dollar exchange rate is trading down 0.2% against the dollar at NIS 3.817/$, and down 0.01% against the euro at NIS 4.345/€.
On Friday, the Bank of Israel set the shekel-dollar representative exchange down 0.47% from Thursday's rate at NIS 3.807/$, while the shekel-euro rate was up 0.31% to NIS 4.359/€.
FXCM Israel research department said this morning, "The shekel-dollar exchange rate continues to move downwards and is trading at its lowest levels since November 2014. Local and global conditions support a further fall in the shekel dollar exchange rate. The main factor moving the exchange rate is the collapse of the dollar on world markets with the global dollar index now falling for five straight weeks, the longest losing streak for over four years, following a week of disappointing macroeconomic results."
"On the local monetary scene, the picture has been transformed following the 0.6% rise in prices in April and this has very much cooled speculation about a rate cut and quantitative expansion by the Bank of Israel. As the picture looks, the shekel-dollar rate will continue its major correction, which began when the rate peaked at NIS 4.07/$ in March. The Bank of Israel is concerned about the depreciation of the dollar and intervened in foreign currency trading last week to prevent the rate falling below NIS 3.80/$. But if the negative drift against the dollar on world markets continues, these interventions won't help, and falling below NIS 3.80/$ will pave the way to NIS 3.78/$.
Published by Globes [online], Israel business news - www.globes-online.com - on May 18, 2015
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