The shekel has strengthened against the dollar and the euro in morning inter-bank trading today, after the Bank of Israel kept the interest rate for December unchanged. The shekel-dollar exchange rate has fallen 0.83%, compared with yesterday's representative rate, to NIS 3.533/$, and the shekel-euro exchange rate has fallen 0.58% to NIS 4.787/$.
Asian markets fell today, as the yen strengthens against the dollar, weighing on markets. Futures contracts point to a flat opening on Wall Street.
"Rumors put about by special interests late last week that the Bank of Israel would cut the interest rate on Monday caused several traders, mostly foreigners, to close positions and weaken the shekel, says Energy Finance and Risk Management CEO Yossi Frank. "The Bank of Israel, with great wisdom it should be said and against its standard modus operandi, joined the buyers and strengthened the trend. After the interest rate announcement, traders pounced on their favorite currency undisturbed. This, of course, is the real test of the Bank of Israel and the finance minister, who in every possible forum has reiterated and emphasized the Ministry of Finance's commitment to weaken the shekel. As we're now seeing, the market does not really pay attention to his remarks, and if they are not backed by deeds, the shekel will strengthen again."
FXCM Israel says today, "Keeping the interest rate unchanged stemmed the shekel-dollar exchange rate's momentum. Movement toward NIS 3.50/$ will force the Bank of Israel to intervene again. Despite signs of a slowdown in the economy and the strengthening of the shekel, concerns about further fanning of real estate prices caused the Bank of Israel to keep the interest rate unchanged this month."
Published by Globes [online], Israel business news - www.globes-online.com - on November 26, 2013
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