The Bank of Israel purchased an estimated $250 million in foreign currency today but still ultimately failed to halt the appreciation of the shekel.
The Bank of Israel set the shekel-dollar representative exchange rate on Friday at NIS 3.434/$, up 0.06% on Thursday's rate, and set the shekel-euro representative exchange rate at NIS 4.679/€, up 0.11%.
However, shortly after the new rate was set options trading saw the shekel resume its appreciation against both the shekel and the euro. The shekel was down 0.15% against the dollar at NIS 3.429/$, and down 0.25% against the euro at NIS 4.667/€.
The shekel has been appreciating sharply for much of the week since the Bank of Israel decided to leave the July interest rate unchanged at 0.75% on Monday. That trend continued in early morning inter-bank trading on the foreign exchange market today and was only temporarily halted when the Bank of Israel intervened to make its purchases.
Bank Leumi (TASE: LUMI) in its weekly survey was confident that the Bank of Israel will be able to thwart continued appreciation. It said, "The basic pressures for the appreciation of the shekel continue but Bank of Israel policies might bring relative stability to the foreign exchange market."
Published by Globes [online], Israel business news - www.globes-online.com - on June 27, 2014
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