The shekel is continuing to lose ground against the world's major currencies. In volatile forex trading, the shekel has lost 2.5% against the US dollar and euro so far this week.
In early afternoon inter-bank trading, the shekel is 0.25% higher against the dollar at NIS 3.658/$ and 0.24% higher against the euro at NIS 3.999/€. Yesterday, the Bank of Israel set the representative shekel-dollar rate up 1.136% from Monday, at NIS 3.649/$, and the representative shekel-euro rate was set 1.044% higher at NIS 3.989/€.
Analysts attribute the shekel's depreciation this week to the escalation along the northern border and disappointment that a temporary ceasefire between Israel and Hamas for Ramadan with the release of Israeli hostages has not been agreed.
But Bank Leumi head of markets strategy Kobby Levi tells "Globes" that Israeli monetary policy has also influenced the current shekel weakness. He says that overseas players were surprised by the Bank of Israel Monetary Committee's decision late last month to leave the interest rate unchanged.
He says, "Following the surprise, foreign investors bought shekels at a rapid pace and supported the appreciation." We now see the effect as purchases of the Israeli currency by foreign investors moderates. In his estimation, the next interest rate decision at the start of April will focus attention and could lead to volatility on the forex market.
Levi also notes that the shekel depreciation against the euro is even more significant.
Published by Globes, Israel business news - en.globes.co.il - on March 13, 2024.
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