The shekel is mixed against the major currencies this morning. The shekel-dollar exchange rate is currently down 0.32% in comparison with Friday's representative rate, at NIS 3.829/$, and the shekel-euro rate is up 0.27%, at NIS 4.3602/€.
Prico Group CEO Yossi Fraiman writes in his market review this morning, "The global sell-off of stocks and bonds is manifesting itself in the local market as well, with supply of dollars from institutions contributing the appreciation of the shekel. In our view, the expectation of a rise in dollar interest rates and recovery on the capital market leave limited potential for the shekel to appreciate. The Bank of Israel, which examines the effective nominal rate, is indifferent to the shekel's appreciation since the strengthening of the euro on world markets tends to cause of depreciation of the shekel versus the nominal effective rate. A weakening of the euro on world markets accompanied by appreciation of the shekel versus the nominal effective rate will bring the Bank of Israel back to significant activity in the local currency market with the aim of reducing the effect of the shekel's appreciation on local industry in general and exporters in particular.
"In our view, unless there are new and extreme dramas in the stocks and bond markets, the potential for the euro, and the shekel, to appreciate against the dollar is limited. As long as the euro does not break through and strengthen towards new peaks, and is held in the $1.1380-1.520/€ band, the potential for the shekel to appreciate against the dollar will remain limited. In the short term, the appreciation target we have mentioned a great deal lately of NIS 3.78-3.82/$ remains valid, and the rate can be expected to rise towards the NIS 3.87/$ level, and later even beyond that to NIS 3.90/$."
Published by Globes [online], Israel business news - www.globes-online.com - on October 12, 2015
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