The shekel-dollar exchange rate has reached a 30-month low and the worst may not be over, according to Globes on Monday.
As of late Monday, the shekel-dollar exchange rate was NIS 3.4712/$.
FXCM Israel warned that “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.”
“The dollar continues to lose ground,” said FXCM. 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.
Not much hope was held out for the prospect of effective intervention by the Bank of Israel either.
“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,” FXCM concluded.