The shekel has weakened against the dollar and euro in morning inter-bank trading. The shekel-dollar exchange rate has risen 0.17%, compared with Friday's representative rate, to NIS 3.525/$ and the shekel-euro exchange rate has risen 0.43% to NIS 4.754/€.
FXCM Israel said today, "The shekel-dollar exchange rate is opening the trading week with the dollar again at high risk of breaking in international markets, because of Janet Yellen's remarks to a Senate committee. Yellen, the candidate to succeed Federal Reserve Board Chairman Ben Bernanke, expressed support for continuing the current expansionist policy in order to support economic recovery and the labor market. This position dispelled speculation of recent weeks that the Fed will begin tapering in December-January, and it now seems that the Fed will postpone tapering until at least March, if not later. Consequently, the dollar is again at high risk because, in practice, this policy causes the dollar to depreciate and encourages risk-takers in the market and investors who prefer assets with higher returns than the dollar.
"However, a factor that might rein in the strengthening of the shekel is the growth figures published on Sunday in Israel, which indicate a sharp and worrying drop in exports in the third quarter. This trend highlights the damage that the appreciation of the shekel is doing to the exports sector and the economy as a whole, which increases the pressure on the Bank of Israel to intervene in trading and take action to stem the strengthening of the shekel. If we see the shekel-dollar exchange rate continue to fall toward NIS 3.50/$, corresponding to the dollar's weakness in international markets, the Bank of Israel may intervene."
Published by Globes [online], Israel business news - www.globes-online.com - on November 18, 2013
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