The Bank of Israel has already announced that it is considering ending dollar purchases.
Clal Forex VP investments Tal Avda said, "Yesterday the dollar dropped below NIS 3.85/$ for the first time and since then it has continued in the same direction almost without stopping. The reason that the NIS 3.85/$ barrier wasn't broken for so long was the large demand for dollars at that level. The breaking of that barrier was evidence of an intensification of the lack of confidence of investors in the US economy and its ability to recover quickly from the crisis.
Avda said that future dollar trading against the shekel depended on continued world developments and the changes in the dollar purchasing policies of the Bank of Israel, which has already announced that it is considering a strategy of ending purchases. The rising loss of confidence in the dollar can send it to a level of NIS 3.75/$ in the short term and down to NIS 3.6/$ in the long term, where the US currency will meet an important support level.
Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2009
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