Foreign currency trading this morning continued last night's trend, which saw the US currency strengthening against the shekel. This was in the wake of the Bank of Israel decision to increase foreign currency purchases to weaken the shekel.
The shekel-dollar exchange rate is up 3% to NIS 3.853/$, and the shekel-euro exchange rate is up 3.5% to NIS 5.545/€.
Easy-Forex said, "It is difficult to know what 'extraordinary movements' are being referred to (by yesterday's Bank of Israel statement) but it is possible to conclude that a low shekel-dollar exchange rate does not suit the Bank of Israel's plans and therefore it has intervened. The Bank of Israel is in effect telling us that a rate between NIS 3.75/$ and NIS 3.8/$ is not acceptable to it and damages the domestic economy and so we can relate to these as levels of support for the US currency.
In addition, the Bank of Israel has put uncertainty into the local foreign currency market due to its sudden additional intervention. The Bank of Israel has added to its daily purchases and will continue to do so until further notice.
Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2009
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