The shekel is strengthening today against the dollar and against the euro. In afternoon inter-bank trading the shekel-dollar exchange rate was down 1.14% at NIS 3.362/$ and down 1.11% against the euro at NIS 3.971/€.
Yesterday, the Bank of Israel set the shekel 0.029% up from Tuesday at NIS 3.401/$, and the representative shekel-euro rate was set 0.042% lower at NIS 4.016/€.
After hovering just above NIS 3.40/$ for the entire month of August, the shekel-dollar rate finally went below the psychologically crucial threshold today to a rate not seen since 2011. This is not so much because the shekel is strengthening but more because the dollar has been weakening worldwide against the major currencies over the past few months as the US Fed prints money to cope with the coronavirus crisis.
One major factor strengthening the shekel is that the vast number of Israelis who normally travel abroad in the summer have stayed at home because of the border restrictions.
Prico Risk Management and Investments CEO Yossi Fraiman,"The Bank of Israel has recently been purchasing foreign currency to halt the appreciation of the shekel beneath NIS 3.40/$. The Bank of Israel was forced to buy billions of dollars and push up its foreign currency reserves to $157 billion. The Bank of Israel has decided to temporarily halt its intervention measures and to allow the dollar free movement and the dollar has dived sharply."
"The halt in the Bank of Israel's intervention in foreign currency trading could open the way for the shekel to appreciate to its historical low (but strong) level of NIS 3.20/$ in 2008. The appreciation of the shekel is all the more significant in the wake of the recession in the economy and the harm to the engine of growth, or main engine, the high-tech sector and software services."
Manufacturers Association of Israel president Ron Tomer said, "Israeli exporters are coping with two diseases at the same time - the coronavirus and the fall of the dollar."
Published by Globes, Israel business news - en.globes.co.il - on August 27, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020