"Tension with Syria is holding back shekel"

FXCM estimates that the Bank of Israel now seeks to defend the NIS 3.55/$ level.

The shekel is slightly stronger against both the US dollar and the euro in this morning's trading. The shekel-dollar rate is currently NIS 3.5668/$, 0.09% lower than yesterday's representative rate, while the shekel-euro rate is down 0.22%, at NIS 4.6663/€.

"The shekel-dollar rate has been stable at the opening of this week's trading. The Bank of Israel intervened to buy several tens of millions of dollars yesterday. If the aim of the Bank of Israel the last time it intervened in trading was to keep the shekel-dollar rate above 3.6, the level that the central bank is now trying to defend is lower, and is at 3.55," the research department of FXCM writes.

"The tension with Syria is also helping to put the brakes on the appreciation of the shekel. It may well be that we will now see some consolidation and stabilization in the region of NIS 3.55-3.60/$. The limited intervention by the Bank of Israel in the region of NIS 3.56/$ indicates that there is still no 'red line' obliging more massive intervention. The critical level, the bottom red line that endangers Israeli exports too severely, is probably at NIS 3.5/$.

"Unless we see some significant change in trend on the global foreign exchange market or in Israel's economic or geo-political situation, it is inevitable that the rate will reach this level. At that point, the Bank of Israel will have to roll up its sleeves and intervene more massively in order to send a message to the markets and to bring about a real turnaround," FXCM says.

Published by Globes [online], Israel business news - www.globes-online.com - on May 7, 2013

© Copyright of Globes Publisher Itonut (1983) Ltd. 2013

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