The shekel has strengthened against the dollar, but is flat against the euro, in morning inter-bank trading today. The shekel-dollar exchange rate has fallen 0.41%, compared with Friday's representative rate, to NIS 3.562$, but the shekel-euro exchange rate has edged up 0.03% to NIS 4.73/€.
Atrade says today that speculators are likely to exploit the uncertainty at the Bank of Israel to put more pressure on the shekel-dollar exchange rate. The Bank of Israel will try to prevent a loss of control and stem the appreciation of the shekel, which is harming the economy. "It is possible that the ongoing stagnation of the shekel-dollar exchange rate between NIS 3.56/$ and NIS 3.60/$ will break within days. Movement below NIS 3.55/$ could increase the pressure on the exchange rate. The expected pressure on the exchange rate, because of the dollar's weakness in the world, will compel the next governor to intervene with full strength to ensure price stability," it says.
FXCM Israel says today, "Uncertainty could definitely weigh on the shekel, and affect foreign investors' sentiment about the Israeli currency, although this might only be temporary."
As for the volatility in foreign currency markets, FXCM says, "Despite the dramatic events in Israel and the world, and the high volatility in international foreign currency markets, the shekel-dollar exchange rate has been almost indifferent, and there has been no significant movement." It finds this difficult to explain, but thinks it may be due to the thin trading volumes in the local market.
"The shekel-dollar exchange rate is very close to breaking through the support level. The dollar is traded very close to the May low of NIS 3.545/$, and movement below this level is liable to accelerate the slide. An examination of global factors affecting trading in the dollar shows without question that the dollar is very vulnerable in international markets, in view of the poor economic data published last week, which are increasing the likelihood that the Fed will continue its quantitative easing," says FXCM.
Published by Globes [online], Israel business news - www.globes-online.com - on August 5, 2013
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