The shekel has weakened against the dollar and euro in morning inter-bank trading today. The shekel-dollar exchange rate has risen 0.10%, compared with Friday's representative rate, to NIS 3.463/$, and the shekel-euro exchange rate has risen 0.09% to NIS 4.805/€. The shekel-dollar exchange rate is at a 30-month low.
FXCM Israel says this morning, "The dollar continues to lose ground. Last week the Dollar Index fell to its lowest level since October 2013. Other key indices, such as the dollar-euro and dollar-pound exchange rates, saw major technical breakthroughs by the dollar, which may signal a break by the dollar.
"Last week, the shekel-dollar exchange rate fell below the low of December 2013, confirming the long-term decline which began at the August 2012 high of NIS 4.09/$. The shekel-dollar exchange rate is now at its lowest level since August 2011, and it can be assumed that, in the coming week, the media will again discuss the negative effects of the low exchange rate on Israeli exports, which will increase pressure on the Bank of Israel to act. But if there is something that we have learned in recent weeks, it is that the Bank of Israel's ability to influence the exchange rate is limited. Despite massive interventions and the interest rate cut, the shekel-dollar exchange rate is at a new low. Measures by the Bank of Israel have only a short-term effect. At the same time, these measures of increasing the foreign currency reserves and reducing the interest rate, are liable to harm the Israeli economy.
"The downward break of the shekel-dollar exchange rate will increase speculators' appetite to profit from the trend and to sell the dollar against the shekel. If the dollar continues to weaken in international markets, the shekel-dollar exchange rate could fall to new lows, and the Bank of Israel's efforts will not help."
Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2014
© Copyright of Globes Publisher Itonut (1983) Ltd. 2014