The Israeli shekel weakened substantially against the US dollar and the euro in foreign exchange trading today. The shekel-dollar representative exchange rate was set 2.094% higher, at 3.705/$. The shekel-euro representative rate also rose, by 1.159% to 4.991/€. At one point this morning, the shekel-dollar rate was up by as much as 2.7%.
"The shekel is catching up with the global trend; traders are fleeing exotic currencies, a market with which the shekel is correlated, and diverting the money back to the dollar," Union Bank of Israel dealing room manager Avi Kimhi told "Globes" today.
Kimhi added that the shekel had actually behaved more moderately than other exotic currencies, pointing out that the South African rand and Turkish lira had wakened by 10% against the US dollar in just 24 hours.
On world bourses and foreign exchange markets trading has been stormy following approval of plans for rescuing banking systems around the world. The US administration has announced that it will inject $250 billion into the banks, in return for equity stakes. Similar plans have been announced in the UK, the euro block, Switzerland, Australia, and Japan. Futures contracts indicate slight rises when stock markets open in New York today.
Foreign exchange trading firm Prico says that the combination of falling shekel interest rates, fears over the stability of leading Israeli companies, and the robustness of the dollar on world markets, are factors favoring a weakening of the shekel.
Published by Globes [online], Israel business news - www.globes.co.il - on October 16, 2008
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