The shekel started a new week of trading in the foreign currency market by slipping against the dollar and euro, as investors predicted the market would remain nervous ahead of Israeli elections and a possible war in Iraq.
The Bank of Israel fixed today’s representative rate at NIS 4.825/$, a 0.31% depreciation from Friday’s official rate of NIS 4.81/$. The shekel lost 0.7% of its value against the euro, causing the official exchange rate against the European currency to hit a record high NIS 5.0909/€.
Investec Asset Management CEO Rami Ordan told “Globes” yesterday that he believed the shekel’s slide was likely to continue, despite the currency’s 0.25% appreciation against the dollar on Friday and its flat performance in options trading on Sunday.
“I think the shekel is still on a weakening trend. What’s happening lately is that a lot of people are in a holding pattern to buy more dollars, but before they do that they want to see the shekel gain slightly. The general trend is to increase the position, which makes it hard for the shekel to stabilize. Therefore, even though we saw a temporary rally for the shekel over the weekend, my target for the short term stands at NIS 4.87/$,” Ordan said.
Not everybody agrees with Ordan, however. ”Globes” technical analyst Ziv Segal said on Sunday that the shekel’s decline to above NIS 4.8/$ wasn’t a strong one and that it could bounce back.
“We would question our forecast that NIS 4.9/$ is the next target for the shekel/dollar. A break below NIS 4.79/$, and certainly NIS 4.78/$, will indicate that the shekel has entered the NIS 4.73/$ - 4.8/$ range.”
Traders still point to Israel’s high interest rates, which at 8.9% continue to underpin the shekel. US interest rates stand at a much lower 1.25%.
Ratings agencies stated last week that there was no prospect at present of a downgrade of Israel’s credit rating.
Published by Globes [online] - www.globes.co.il - on 13 January, 2003