Despite significant foreign currency purchases by the Bank of Israel in recent weeks, the shekel continues to gain against the dollar. The Bank of Israel set the shekel-dollar exchange rate down 0.746% today at NIS 3.428/$ - the strongest the Israeli currency has been since July 2008.
If the Israeli currency continues strengthening and the exchange rate goes below NIS 3.23/$, and most analysts believe it will continue gaining in the short term, then the shekel will be at its strongest since November 1996.
The shekel has been gaining strongly in recent weeks despite foreign currency purchases of $1.9 billion last month and hundreds of millions of dollars more in the first few days of December.
Bank Hapoalim analysts said, "The strengthening of the shekel to a 12 year peak mainly reflects the weakness of the dollar worldwide but is also supported by factors like the rise in Israel's account surplus and rises on the world's stock markets. The dollar comprises 39% of the basket of currencies so there has also been a sharp appreciation in the shekel's nominal effective rate."
"In the short term the shekel will be influenced minly by trends on stock markets. A continued rise brings about the sale of large amounts of foreign currency by institutional investors. Appreciation pressures will be eased when restrictions are removed on activities and we will again see Israelis traveling abroad."
Published by Globes, Israel business news - en.globes.co.il - on December 8, 2020
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