The shekel-sterling exchange rate fell 1.84% on Friday morning as the Bank of Israel set the representative rate at NIS 4.7166/£. Last night the UK currency plunged by a remarkable 6% against the dollar on Asian markets in just 2 minutes. There was an initial assumption that a trader had entered an incorrect deal but no such incident has been reported and it now seems that the unusual fall was due to market concerns about Brexit combined with badly programmed computer algorithms.
Following a jingoistic speech by British Prime Minister Theresa May at the ruling Conservative party conference in Birmingham earlier this week in which she condemned "international elites," the already battered pound has been losing even more ground. On Friday afternoon it was trading 2.5% down against the US dollar at a 31 year low of $1.23/£. On the eve of the Brexit referendum it was trading at $1.23/£. In other words, sterling has lost more than 20% against the dollar.
On the day of the Brexit referendum on June 23, the pound was trading at NIS 5.68/£. Sterling has lost 17% against the Israeli currency since the Brexit vote.
The latest falls come as a "hard Brexit" - in which the UK leaves the EU without a free trade agreement - seems increasingly likely. Anti-immigrant sentiment in Britain is bridling against the EU's insistence on linking free trade with freedom of movement of labor. Moreover both German Chancellor Angela Merkel and France's President Francois Hollande have been seen to be hardening their positions on compromising with the British on freedom of movement.
Meanwhile the shekel has been weakening against the dollar and strengthening against the euro. The Bank of Israel set the shekel-dollar exchange rate up 0.424% at NIS 3.794/$ and set the shekel-euro rate down 0.267% at NIS 4.215/€.
In inter-bank trading this afternoon, the shekel was weaker against the dollar and the euro. The shekel-dollar exchange rate was trading up 0.12% at NIS 3.799/$ and the shekel-euro exchange rate was trading up 0.45% at NIS 4.234/€.
Published by Globes [online], Israel business news - www.globes-online.com - on October 7, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016