Shekel weakens slightly in calmer trading

shekel  / Photo: Shutterstock illustration , Shutterstock.com
shekel / Photo: Shutterstock illustration , Shutterstock.com

The shekel-dollar and shekel-euro rates are both higher than yesterday's representative rates.

After the see-sawing of the past few days, following the Bank of Israel's announcement last week that it would buy $30 billion in 2021, trading on the foreign exchange market is calmer this morning.

The shekel-dollar rate is currently up 0.22% in comparison with yesterday's representative rate, at $3.2341. The shekel-euro rate is up 0.56%, at NIS 3.9181.

On global markets, the US dollar is slightly weaker against the euro, at around $1.21/€, and around 0.3% stronger against the Japanese yen, at ¥104/$. The yield on ten-year US government bonds is 1.11%.

Yesterday, the shekel-dollar rate climbed to NIS 3.28/$ at the opening, but subsequently fell back, and the representative rate was eventually set 0.12% lower, at NIS 3.227.

IBI Investment House chief economist Rafi Gozlan writes in a market review: "Besides the volume of foreign currency purchases itself, the Bank of Israel's announcement contains a clear signal of the bank's determination to halt the appreciation of the shekel. The bank thereby means to halt speculative activity and the hedging trend among local investment institutions. The latest figures, for November, indicate stability that month, but in general, investment institutions had sold $3.5 billion of foreign currency net since May, and, because of the continuing positive trend on financial markets, seem to have made further net sales in the first half of January.

"The Bank of Israel's new currency purchasing program is significant for the balance of forces on the foreign exchange market, but no less important than its extent is the change of approach by the Bank of Israel, which, to go by past experience, is setting the current program as a minimum level of potential purchases in the coming year. The more the markets are persuaded of the bank's determination, particularly the investment institutions, the shorter will be the way to a weaker shekel. Furthermore, if the Ministry of Finance enters the picture through partial hedging of the foreign currency debt, the new purchasing program will be appreciably more effective," Gozlan writes.  

Published by Globes, Israel business news - en.globes.co.il - on January 19, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

shekel  / Photo: Shutterstock illustration , Shutterstock.com
shekel / Photo: Shutterstock illustration , Shutterstock.com
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