Falling markets weigh on shekel

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative

Yesterday the Bank of Israel revealed that it has bought $11.7 billion in foreign currency in the first two months of 2020.

The shekel is weakening today against the dollar and against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate was up 0.58% against the dollar at NIS 3.337/$ and the shekel-euro rate was up 0.07% at NIS 3.959/€.

On Friday, the Bank of Israel set the representative shekel-dollar rate 0.181% higher at NIS 3.318/$, and the representative shekel-euro rate was set 0.683% lower, at NIS 3.957/€.

The Israeli currency is trading at its weakest against the dollar since late November as global stock exchanges continue to fall, compelling Israeli institutional investors buy foreign currency to cover their exposure to Wall Street and other overseas markets.

Another factor weakening the shekel in the past two months has been huge foreign currency purchases by the Bank of Israel to weaken the shekel. Yesterday the Bank of Israel revealed that it has bought $11.7 billion in foreign currency in the first two months of 2020 - nearly 40% of the $30 billion it declared it would buy in all of 2021, although Bank of Israel Governor Prof. Amir Yaron has said that the central bank could ultimately buy more than $30 billion this year.

On the other hand, Israel's economy has now almost completely reopened as the vaccination drive continues with 5 million Israelis already having received at least one dose of the Covid vaccine and this is very soon likely to strengthen the shekel. The Central Bureau of Statistics also revealed today that Israel's current accounts surplus (the amount of foreign currency coming into the country against the amount going out) rose to a record $20 billion in 2020 - the main reason for the sharp strengthening of the shekel last year.

Published by Globes, Israel business news - en.globes.co.il - on March 8, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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