The shekel strengthened against the dollar in morning inter-bank trading, but weakened against the euro in morning inter-bank trading, the morning after the House of Representatives passed the bill to prevent the US from going over the fiscal cliff, the day after the Senate passed the bill. The shekel-dollar exchange rate is down 0.56%, compared with Monday's representative rate, to NIS 3.712/$, but the shekel-euro exchange rate is up 0.28% to NIS 4.935/€.
FXCM Israel research department head Moshe Shalom said today, "Despite the strong rally in the TASE, because of the compromise agreement to avoid the US fiscal cliff, the dollar has been stable in the past few days. This is an interesting and unusual confluence, because logically such a strong stock rally should cause the shekel-dollar exchange rate to drop sharply. The only factor affecting the direction is the exchange rate's technical status; all other factors point to drop to NIS 3.70/$.
"The most important factor for this is the government's latest tax hikes, despite the election campaign. The government's measures show local investors that the current government, which according to all polls will be very similar to the next government, is determined to meet tough macro data. This is bad for the dollar and good for the shekel. The very low liquidity in the foreign currency market in general, and in the shekel-dollar exchange rate in particular, creates a kind of "waiting period" ahead of more active trading."
Published by Globes [online], Israel business news - www.globes-online.com - on January 2, 2013
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