Dollar Exchange Rate Falls Below 3.1

After a brief respite, the shekel has powered back, driving the exchange rate with the dollar down to 3.09.7 as of Wednesday afternoon, Globes reported.

On Tuesday, the Bank of Israel set the representative shekel-dollar rate down 0.190% from Monday, at NIS 3.155/$, and the representative shekel-euro rate was set 0.487% lower at NIS 3.552/€.

The shekel’s performance was attributed to a rise in stock markets as concerns about the COVID Omicron variant waned, among other factors.

“The shekel has been strengthening sharply as Israeli institutional investors are required to buy shekels to hedge their overseas investments when global markets rise. This correlation has been seen clearly over the past year as international markets have risen sharply,” Globes said.

Efforts by the Bank of Israel to tamp down the shekel by means of foreign currency purchases have not availed. The Bank of Israel announced in January that it would buy $30 billion in foreign currency this year, and bought an additional $4 billion in November.

Most analysts expect the trend to continue, while the Bank of Israel will likely continue buying foreign currency to keep the bottom from falling out altogether.