An analysis published this week by Bank of America Merrill Lynch to its customers states that the shekel is the number two currency in the world in long positions held by investors and speculators but recommends going short on the Israeli currency because the Bank of Israel is determined to weaken it.
"According to our proprietary flow data, the Israeli shekel is the second largest long, with particularly large fast money, which makes the shekel more vulnerable to sharp corrections." Merrill Lynch's analysts wrote.
The analysts explained, "The Bank of Israel is determined to weaken the shekel."
The shekel has been a favorite of foreign currency traders and speculators in recent years. The Bank of Israel has had to intervene in foreign currency trading in order to offset their effect on what the Governor of the Bank of Israel calls "short-term financial factors." Since it began intervening in trading on November 25, the Bank of Israel has purchased at least $4 billion dollars worth of foreign currency, but as of now, this intervention is not having any clear effect.
Today's shekel-dollar exchange rate is NIS 3.46/$, the same as when the Bank of Israel began its intervention. The shekel gave a bit of ground against the euro, with the shekel-euro exchange rate rising to NIS 3.857/€, compared with NIS 3.84/€ when the Bank of Israel began to intervene.
Published by Globes [online], Israel business news - en.globes.co.il - on January 15, 2020
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