The shekel-dollar exchange rate fell 1.13% in afternoon inter-bank trading today to NIS 3.407/$ - the lowest rate for 30-months, even though Governor of the Bank of Israel bought $100 million in foreign currency today. The shekel-euro exchange rate fell 0.84% to NIS 4.939/€, after rising at the opening to nearly NIS 5/€.
Part of the explanation for the strength of the shekel against the dollar is the wider interest rate gap between Israel and the US since the Bank of Israel raised its lending rate by 50 basis points at the end of March.
Market sources also cite the strong growth and export figures reflecting the strength of the Israeli economy, which has to find expression in the exchange rate. Today, the Central Bureau of Statistics published figures showing a 3% rise in exports in March compared with February, to $3.9 billion. So far this year, exports have grown by more than 10%. Mixed-high and high technology exports have grown by 33% and 17% respectively.
Sources inform "Globes" that Barry Topf, director of the Bank of Israel Foreign Currency Department, and the governor of the bank, Stanley Fischer, held a long meeting today, and it could be that the central bank will announce additional measures, or a deepening of existing measures (reporting and liquidity requirements) this week.
On the other hand, Bank of Israel sources have released figures to the press showing that, since the latest interest rate decision, the shekel has strengthened against the dollar at a similar rate to the appreciation of the major currencies. The sources requested that things should be kept in proportion.
In international markets. The dollar is traded against the euro at $1.448/€, and rose 0.58% against the Japanese yen to ¥84.19/$.
Analysts do not see the dollar significantly recovering in the coming months due to the postponement of an interest rate hike in the US by the Federal Reserve Bank until the monetary easing program to buy $600 billion in bonds is completed.
Published by Globes [online], Israel business news - www.globes-online.com - on April 13, 2011
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