The shekel-dollar exchange rate fell 0.2% by early afternoon in inter-bank trading to NIS 3.729/$, while the shekel-euro exchange rate edged up 0.05% to NIS 5.506/€.
Foreign currency trading is taking place against the backdrop of two announcements by the Bank of Israel yesterday: the Survey of Economic Developments - May-August 2009, and foreign currency trading in September.
In the Survey of Economic Developments, the Bank of Israel notes that the shekel appreciated 8.4% against the dollar in May-August, which it attributes to "exchange rate trends in international markets, including the weakening of the dollar, the surplus in Israel current accounts, and optimistic assessments about the recovery of the Israeli economy from the crisis more quickly than other economies."
The Bank of Israel added that were it not for its intervention in the market, the shekel would have appreciated more. "The daily purchases of foreign currency during most of the period reviewed moderated the appreciation of the shekel," it said.
As for foreign currency trading in September, the volume of currency conversions fell to $32 billion from $41 billion in August. Trading by foreign financial institutions fell to $11 billion in September from $14 billion in August. There were fewer trading days in September because of the holidays.
The Bank of Israel intervened less in the foreign currency in September than in the preceding months. It bought $1.6 billion in dollars in September compared with $4 billion in August.
"Bloomberg" today reports that some central banks are diversifying their foreign currency reserves, by selling dollars and buying euros and yen. Central banks increased their aggregate foreign currency reserves by $413 billion in the third quarter - the largest amount since 2003 - to $7.3 trillion.
"Bloomberg" quotes Barclays chief US currency strategist in New York Steven Englander as saying, “Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it. It looks like they are really backing away from the dollar."
Published by Globes [online], Israel business news - www.globes-online.com - on October 12, 2009
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