Bank of Israel Governor Dr. Karnit Flug has attributed the intransigence of the shekel — at its strongest against the dollar since 2014 — in part to artificial influences, namely speculators.
“The shekel is strong and is in our opinion overvalued,” Flug told the Globes Business Conference in Yerushalayim on Thursday, an assessment shared with foreign currency experts.
As of late Thursday, the exchange rate was NIS 3.4144/$.
Part of the explanation for the shekel’s position in recent days is the activity of speculators on the foreign currency exchange market, including algorithm traders working with large amounts according to mathematical models, she said.
But she also acknowledged that the positive performance of the Israeli economy has a lot to do with it.
“The shekel is strong because of basic influences but overall performance is good and we have full employment; but more than that there is the influence of the central bank and we want to offset through foreign currency intervention.”
On Wednesday, the Bank of Israel announced that the interest rate would remain unchanged at its historic low of 0.1 percent. The interest rate has been unchanged since March 2015.