The shekel is again weakening against the dollar and euro in afternoon inter-bank trading. This morning the slide against the US currency which began early last week when the Bank of Israel unexpectedly cut the interest rate by 25 basis points to 1.5%, the lowest rate in three years, was temporary halted. However, by mid-afternoon the shekel-dollar exchange rate had risen 0.44%, compared with yesterday's representative rate, to NIS 3.691/$, and the shekel-euro exchange rate had risen 1% to NIS 4.772/€.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.675/$, up 0.41% on Monday's rate, and set the shekel-euro representative exchange rate at NIS 4.725/€, up 0.36%.
In international markets, the dollar has strengthened 0.05% against the euro to $1.291/€.
The market believes that the Bank of Israel will continue its drive to weaken the shekel by lowering the interest rate for June by a further 25 basis points to 1.25%. The announcement is due next Monday.
FXCM Israel research department said, "After the sharp strengthening of the dollar against the shekel last week, we have seen a slowing down this week in the upward momentum with the exchange rate stabilizing around the key level of NIS 3.66/$. The fall-off in volatility in the foreign exchange arena comes alongside stabilization in global foreign currency markets."
FXCM Israel added, "As stated the sharp rise in the dollar on the local market occurred at the same time as the breakthrough by the dollar on world markets. This week, with few economic data being published, we see stabilization and a certain correction of the dollar and this is expressed in the halt of the shekel slide against the dollar. From the point of view of key levels a rise above NIS 3.67/$ will pave the way to a round exchange rate of NIS 3.70/$ or even NIS 3.71/$, while a rise above NIS 3.71/$ would signal an expanded correction of the shekel-dollar exchange rate upwards."
Published by Globes [online], Israel business news - www.globes-online.com - on May 22, 2013
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