The shekel is weakening sharply against the dollar and against the euro today after the Bank of Israel intervened in foreign currency trading yesterday afternoon and began purchasing large amounts of foreign currency. Potash Corp. has also reportedly been placing large forward contracts to buy $700 million for the shekels it will receive for selling a stake in Israel Chemicals.
In morning inter-bank trading, the shekel-dollar exchange rate was up 0.87% from yesterday's representative rate at NIS 3.4395/$, and up 0.83% against the euro at 4.2054/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.294% from Monday's exchange rate at NIS 3.410/$ and set the shekel-euro rate down 0.074% at 4.171/€.
The Bank of Israel reportedly purchased the equivalent of about $400 million in foreign currency yesterday afternoon reversing the strengthening of the shekel. Over the past few days the shekel-dollar exchange rate had been hovering around the NIS 3.40/$ level - a low not seen since July 2011.
Last week Bank of Israel Governor Karnit Flug told the "Globes" Business Conference in Jerusalem that the shekel is overvalued, in part because of speculators working with algorithms. Traders have told "Globes" that these algorithms are easily influenced by changes in trends and momentums and it could be that those algorithms are now instructing computers to sell shekels.
Published by Globes [online], Israel business news - www.globes-online.com - on January 17, 2018
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