As the shekel-dollar exchange rate continued to drift in favor of the shekel, the market waits to see if the Bank of Israel will intervene.
The market closed on Tuesday with the dollar down 0.228% to 3.4950 NIS; the Euro was down 0.027% to 4.8050 NIS.
FXCM Israel said on Tuesday morning, “The shekel-dollar exchange rate continued to fall with the start of trading this week, reaching NIS 3.48/$ yesterday. The fall through the NIS 3.50/$ threshold, and below the lower limit of the range since October, effectively cuts the ground out from under the exchange rate and creates strong negative momentum.
“The market is waiting to see whether the Bank of Israel will now intervene to stem the slide and protect September’s low of NIS 3.473/$. The Bank of Israel cannot stand aside in the face of the exchange rate’s plunge to a level that jeopardizes exports. The question is whether it will act before the exchange rate falls below NIS 3.473/$ or afterwards.”
FXCM Israel added, “In view of the better-than-expected jobs and growth figures published in the U.S. last week, risk-takers have returned en masse to the foreign currency market, and traders prefer currencies with higher yields, which puts the dollar in an inferior position against almost every currency, including the shekel.”