Prico: With no Bank of Israel intervention, exporters should manage their long-term exposure to foreign currency for the new era in the market.
Options point to a further strengthening of the shekel against the dollar and euro today. There is no foreign currency trading because of New Year's. Options point to a 0.12% drop in the shekel-dollar exchange rate, compared with Tuesday's representative rate, to NIS 3.467/$ and a 0.28% drop in the shekel-dollar exchange rate to NIS 4.768/€.
Prico Risk Management and Investments says, "Without government intervention, the shekel will continue to strengthen, and the limited dollar purchases by the Bank of Israel are not enough to reverse the trend. From a long-term perspective, the shekel has strong appreciation potential, which requires exporters and manufacturers to prepare. In view of the change in style reflected by the Bank of Israel's new policy, which effectively seeks to end interventions to stem the strengthening of the shekel that is not caused by the flow of natural gas in Israel, it seems that every exporter should expect, at the very least, a new era in the foreign currency market. More than ever, we now advise manufacturers to manage their long-term exposure to foreign currency and the interest rate, because from a long-term perspective, the shekel has substantial potential for strengthening, requiring a system-wide review of risks caused by changes in exchange rates."
Published by Globes [online], Israel business news - www.globes-online.com - on January 1, 2014
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