The shekel-dollar exchange rate is continuing yesterday's drop, when the exchnage rate fell over 2% against leading currencies. The shekel-dollar exchange rate is down 0.33% to NIS 3.33/$ inter-bank trading this morning, after an early gain. However, the shekel-euro exchange rate is up 0.15% to NIS 5.18/€, after retreating from a stronger gain at the opening.
Yesterday's shekel-dollar representative exchange rate was set at NIS 3.34/$, a drop of 2.28% on the day before; the shekel-euro representative exchange rate was set at NIS 5.17/€, down 1.9%; and the shekel-pound representative exchange rate was set at NIS 6.508/₤, down 2.74%.
"Globes" analyst Avi Temkin notes, "A strengthening of 2.5% by the shekel within the space of just a few hours cannot be considered a normal occurrence, not for a properly functioning market. The dollar has lost considerable ground worldwide yet within this movement, the shekel's strengthening against both the dollar and the euro stands out above the rest." He also notes market claims that large deals originating in New York which were transacted yesterday afternoon, Israel time, were responsible, but he questions them.
Easy Forex attributes yesterday's shekel surge to foreign currency traders finally realizing the domestic inflationary pressures, and that the Bank of Israel will probably have no choice but to sharply raise the interest rate in order to rein inflation in quickly. In the short term, a sharp interest rate hike will support the shekel.
Published by Globes [online], Israel business news - www.globes-online.com - on June 18, 2008
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