Bank of Israel interventions in the foreign currency market aimed at stemming the surge of the shekel have met with little success in recent days.
Despite the Bank’s large purchases of dollars, the shekel was continuing to muscle aside the dollar. As of Monday night, the dollar/shekel exchange rate was listed at NIS 3.5951/$, and the shekel/euro rate was at NIS 3.9312/€.
Prico Risk Management and Investments CEO Yossi Fraiman assessed the situation:
“The continued appreciation of the shekel represents a real threat to local industry. Cheap imports together with damage to the competitiveness of the Israel importer are leading to the closure of factories and the transfer of production to the target markets. Employment in the local economy is becoming more and more dependent on a small group of international concerns operating in it, such as Teva, Intel, Amdocs, Vishay, Eurocom and Bezeq, Formula, Israel Chemicals, and a few others.
“In our view, the Bank of Israel, which sees the danger of the slippery slope with the breakthrough of the NIS 3.58/$ level, will continue to intervene in trading with the aim of preventing the exchange rate from sliding towards the lows of the summer of 2014, when the shekel-dollar rate fell below NIS 3.5$, and the low of the summer of 2008, when the rate weakened to NIS 3.24/$ and even lower. We expect the Bank of Israel to intervene on a large scale.”