After strengthening yesterday, the shekel is again losing ground today in inter-bank trading against the dollar but is strengthening against the euro. The shekel-dollar exchange rate is trading up 0.42% at NIS 3.938/$ and the shekel is 0.94% down against the euro at NIS 4.837/€.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.922/$, down 0.330% on Tuesday's rate, and set the shekel-euro representative exchange rate at NIS 4.883/€, down 0.808%.
Prico Israel CEO Yossi Fraiman said that the dollar's immunity and quantitative easement expectations in Europe and Japan support the strengthening of the US currency in the coming year. The negative interest rates gap and the possibility that this gap will widen in 2015 along with positive trends on global financial markets also support the strengthening of the dollar against the shekel. End of year financial activities also contribute to the volatility of exchange rates although with the Christian holidays beginning next week there will be a significant fall in trading volumes and with that a fall in sensitivity thresholds.
He said, "In our estimation the potential for depreciation has not yet been realized and is supported by the strengthening of the dollar on the global arena, the negative interest rate gap and positive trends on global markets. In the short term, a renewed rise in shekel interest rates would not support a 'violent' correction in exchange rates, because in contrast to the halted depreciation, which was urged by exporters, support for the dollar in the event of a shekel appreciation would only be limited, and led mainly by the Bank of Israel."
Published by Globes [online], Israel business news - www.globes-online.com - on December 18, 2014
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