Shekel weakens against dollar
Prico: Falling stock markets and foreign currency market volatility encourage a move to safe havens in the local market too.
In international market, the dollar has strengthened against the euro to $1.305/$, following the deadlock in Italy's elections.
Atrade said today that the political storm in Italy has hit financial markets. The latest exit polls show Silvio Berlusconi, who heads the center-right bloc, locked in a dead heat with Pier Luigi Bersani, the leader of the center-left bloc, and there is a good chance that Berlusconi will again be elected president. "The financial markets responded with sharp drops, the euro spiraled down toward $1.30/€, since Berlusconi strongly opposes the austerity plan, and he is less liked by the EU," it says.
Prico Risk Management and Investments Yossi Fraiman said, "Falling prices on global stock markets along with volatility in foreign currency markets encourage a move to safe havens in the local market too, and the shekel is weakening against the dollar. We believe that a weakening of the shekel to NIS 3.74/$ could encounter foreign currency supplies by exporters, and the shekel will continue to be traded within a broad band of NIS 3.68-3.78/$ against the dollar. In a long-term perspective, there is no change in our view, because the depreciation potential is limited and specific events causing the dollar to strengthen in international markets, and security shocks in our region could cause volatility in exchange rates and a depreciation of the shekel. The weakness of the shekel following specific incidents offers a new opportunity to hedge at historic exchange rates."
FXCM Israel said, "We saw extreme volatility in the shekel-euro exchange rate yesterday, ranging between NIS 4.94/€ and below NIS 4.87/€. The inability of the shekel-euro exchange rate to lock above NIS 4.90/€ results in downward pressure. So long as the euro remains weak on international markets, due to political instability, the shekel will strengthen against the euro, with NIS 4.83/€ and NIS 4.85/€ as the first targets.
As for the shekel-dollar exchange rate, even though the Bank of Israel kept the interest rate unchanged, we saw the correction of the shekel against the dollar continue. Last week, the shekel-dollar exchange rate rose above the resistance level of NIS 3.71/$, imparting momentum to the exchange rate. In view of falling prices on Wall Street and heavy demand for dollars as a safe haven, the trend in the shekel-dollar exchange rate will likely continue, because the conditions are finally ripe for a correction in the exchange rate. The next big target is NIS 3.77/$."
Published by Globes [online], Israel business news - www.globes-online.com - on February 26, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013
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