Study Claims Run-Up in Shekel’s Value Due to Manipulation

A study conducted on behalf of the Israel Export Institute indicates that some 50 percent of the strengthening of the shekel over the past year were due to speculation or market manipulation. Results of the study, which were published in Ma’ariv, indicate that much of the manipulation occurred on days when trading in foreign currency was light.

With the dollar trading at about NIS 3.40 – far lower than exporters would like – the report has the potential to prompt the government to take action, Maariv said. Many of the speculative trades took place on weekends, and at the late hours of the day when most traders have stopped trading. The report points out specific information on times of trades and the changes in valuation of the dollar, and points out patterns that appear to repeat themselves on a cyclical basis – indicating that there is direct manipulation of the market.

In response to the report, Vered Yitzchaki, CEO of Protective Finance Advisors, told Maariv that the fault lies with the Bank of Israel, which failed to stand up to the manipulators. According to Yitzchaki, it was the job of the Bank to protect the stability of the shekel, and to ensure that conditions are favorable for exporters. The Bank “needs to adopt a clear policy, and not act as it has until now. We cannot allow the market to believe that the ‘reasonable adult’ has disappeared and that it is every man for himself. If the Bank does not act as central banks abroad do to protect its exporters, the fall of the dollar to NIS 3.3 and even below is possible, and that will cost the economy many jobs.”