The shekel weakened against the dollar and euro in morning inter-bank trading today after the Bank of Israel intervened in the market. The shekel-dollar exchange rate rose 0.51%, compared with Tuesday's representative rate, to NIS 3.489/$, and the shekel-euro exchange rate rose 0.14% to NIS 4.789/€. The Bank of Israel bought more than $250 million, according to market sources.
For the first time, former deputy governor of the Bank of Israel Prof. Zvi Eckstein has publicly expressed support for an exchange rate floor. "According to my analysis, there is room for setting a shekel-dollar exchange rate floor at NIS 3.30-3.40/$. The exchange rate floor must be part of a Bank of Israel strategy for supporting the second objective - support for growth and jobs under the constraints of the inflation target," he told "Globes" in an interview.
FXCM Israel believes that the shekel will continue to strengthen. "What dictates movement in the foreign exchange market is the correlation between currencies and risk sentiment, and under these conditions, the dollar is in an inferior position because of its negligible interest rate. Therefore, if we see stock prices rising further at the start of the year, the dollar will continue to weaken against other currencies, including the shekel, despite the tapering of quantitative easing and rising confidence in the American economy. The shekel-dollar exchange rate has already fallen below the September low and its momentum is taking it toward NIS 3.40/$ and lower," it said today.
Published by Globes [online], Israel business news - www.globes-online.com - on January 2, 2014
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