FXCM Israel: US Fed chair Janet Yellen has cooled dollar demand with her interest rate statement.
The shekel is again appreciating against the dollar and against the euro in inter-bank trading today. The effect of the surprise decision by the Bank of Israel on Monday to cut the interest rate by 0.15% to a record low 0.1% has worn off after one day, when the shekel gave up more than 2% against the dollar and euro.
The shekel-dollar exchange rate is trading down 0.66% at NIS 3.926/$ and the shekel is trading down 0.43% against the euro at NIS 4.458/€.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.952/$, up 2.436% on Monday's rate, and set the shekel-euro representative exchange rate at NIS 4.478/€, up 2.678%.
FXCM Israel Research Department said this morning, "The strong upward momentum of shekel-dollar exchange rate continued yesterday up to a level of NIS 3.97 before retreating to NIS 3.95. The surprise reduction in the interest rate by the Bank of Israel to a historic low opened up the way for a wave of short trading among speculators. US Fed chair Janet Yellen has somewhat cooled off dollar demand both on world markets and the domestic market when she testified to a US Congress committee that she doesn't expect a rate rise at the next Fed interest rate meeting. The market interpreted this statement as a hint that the first interest rate rise won't take place before the end of the third quarter - start of the fourth quarter."
Published by Globes [online], Israel business news - www.globes-online.com - on February 25, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015
shekels