The shekel-dollar exchange rate has reached a 15-year low, the Deutsche Bank forex department emphasizes in an analysis distributed to investors. The bank states that shekel sales, which began last week, are likely to provide a turning point in the long-term shekel strengthening trend and the start of a long-term weakening trend.
Under the headline, "Shekel Shackled," Deutsche Bank is recommending a short position on the shekel to its customers for the first time. The bank believes that the shekel's positive momentum can no longer continue.
Deutsche Bank, which plays a central role in the forex market, is the only concern to date to so clearly recommend reducing exposure to the shekel. The bank said that it had recently taken its profits from its long position on the shekel, and was now recommending tactical short positions, given the shekel's overpricing and a five-year high in long-positions.
Deutsche Bank states that according to its DBeer model, the shekel is now 9% overpriced, the most highly overpriced it has been since 2001. According to the bank, in terms of purchasing power parity, the shekel is overpriced by 12%, an all-time high.
Deutsche Bank goes on to say that its analysis, long positions in the shekel held by speculators are at a five-year high. At the same time, the bank adds that the shekel sales it saw last week could provide to be a turning point indicating the beginning of a long-term shekel-selling trend.
The shekel has gained 9% this year gainst the dollar but after falling below NIS 3.50/$ last week for the first time since August 2014, the shekel has weakened over the past two days and the Bank of Israel set the representative rate today up 0.228% at NIS 3.522/$.
Published by Globes [online], Israel Business News - www.globes-online.com - on July 5, 2017
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