Shekel still strengthening

Shekels Photo: Shutterstock

FXCM Israel: There is renewed pressure on the Bank of Israel to intervene on the foreign exchange market.

The shekel was strengthening against the major currencies in afternoon trading. The shekel-dollar exchange rate is currently down 0.39% in comparison with Friday's representative rate, at NIS 3.616/$, and the shekel-euro rate is down 0.55%, at NIS 3.888/€.

FXCM Israel says in its market review this morning: "After another negative week (nine of the past eleven weeks have been negative), the dollar-shekel pair reached a new low of NIS 3.625/$, the lowest level since September 2014, despite the interest rate hike by the US Federal Reserve last week. The reason was disappointment on the financial markets, which expected that the Federal Reserve would hint at further planned rate hikes.

"On the face of it, given the fact that the Federal Reserve is the only central bank that has raised its interest rate, the US dollar ought to strengthen against the other currencies. The peak that the dollar reached in the wake of President Donald Trump's election victory, however, is now working against it, and we are seeing a sharp downward correction, both locally and globally.

"The uncertainty surrounding Trump's fiscal policy is also weighing on the dollar. The US president has yet to fulfil his election promises concerning tax reform and fiscal expansion. In addition, there is the condemnation of Trump's declared protectionist policy published last week by the G20 finance ministers, which has harmed market confidence in his economic leadership.

"The sharp fall of the shekel-dollar exchange rate to new lows raises the pressure on the Bank of Israel to act to halt the appreciation of the shekel, which hurts exports, and we shall see if the central bank will intervene in foreign exchange trading again in the coming days."

Published by Globes [online], Israel business news - www.globes-online.com - on March 20, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Shekels Photo: Shutterstock
Shekels Photo: Shutterstock
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