After a brief respite yesterday, when it weakened slightly against the dollar, the shekel is continuing its recovery against the dollar today. The shekel is strengthening against the dollar and stable against the euro inter-bank trading this morning. The shekel-dollar exchange rate is down 0.67% at NIS 3.922/$ and the shekel is 0.06% down against the euro at NIS 4.885/€.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.945/$, up 0.101% on yesterday's rate, and set the shekel-euro representative exchange rate at NIS 4.888/€, up 0.316%.
FXCM Israel research department said this morning, "The trigger for the sharp correction in the shekel-dollar exchange rate is more related to the dollar's situation globally and not to dire circumstances of the shekel. With oil prices plummeting to a five-year low, the level of concern and risk on global markets is very high at the moment, and this hits the dollar hard, and it has been falling all week."
FXCM added, "the sharp recovery of the shekel-dollar exchange rate continues and yesterday the rate even touched on NIS 3.90/$, almost NIS 0.10 below the peak reached at the beginning of the week. The strength of the fall does not denote anything fundamental in the exchange rate trend and stems mainly from the previous sharp rises. On financial markets what does up fast comes down fast, and that's the case with the shekel-dollar exchange rate. The failure to break through the NIS 4/$ barrier, and the proximity to the end of the year, gave the green light to an extensive wave of profit-taking by traders with long positions, who prefer to ensure their profits before the end of the year.
NIS 3.90/$ is now the key position for the continued correction. The trend for the shekel-dollar exchange rate in 2015 is upwards and traders might take advantage of the current fall to position themselves at an attractive price ahead of the continued expectation of a rise. On the other hand, if it seems that a fall below NIS 3.90/$ will push more long traders into profit taking we could see a speedier fall."