The shekel has strengthened against the major currencies this morning, at the start of the trading week. The shekel-dollar exchange rate is currently down 0.09% in comparison with Friday's representative rate, at NIS 3.9256/$, and the shekel-euro rate is down 0.33%, at NIS4.2288/€.
Expectations are growing on the capital market that the Bank of Israel will shortly cut its interest rate to zero, or even to a negative rate, following the lower than forecast inflation reading for March and the shekel's continuing appreciation against the effective currency basket reflecting Israel's export markets.
FXCM Israel says in its market survey this morning, "The shekel-dollar pair, which again failed to break through the NIS 4/$ level last week, opens this week at the bottom of its recent trading range, around NIS 3.92/$. The range in which the pair has recently moved is NIS 3.9-4. A break through one of the limits of this range would dictate the short-term trend, and this week we shall wait and see whether the pair's negative drift will lead to a break below NIS 3.9/$, which could accelerate the correction in the shekel-dollar rate towards NIS 3.87/$ and NIS 3.85/$."
Prico estimates that a breakthrough to the NIS 3.82-3.85/$ level will support intervention by the Bank of Israel in trading, since the central bank is aware of the pattern of movements in the exchange rate and of the need to halt the appreciation of the shekel before the rate collapses. "The shekel-dollar rate has been in the limited range of NIS 3.83-4.08/$ for five months. A break out of this range will trigger stop-loss orders and abnormal movement in the exchange rate," Prico says.
Published by Globes [online], Israel business news - www.globes-online.com - on April 20, 2015
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