The shekel is mixed against the major currencies this morning. The shekel-dollar exchange rate is currently down 0.1% in comparison with Friday's representative rate, at NIS 3.83/$, and the shekel-euro rate is up 0.46%, at NIS 4.3548/€.
This month too, most analysts believe that the Bank of Israel will leave its interest rate unchanged, at 0.1%. There are those, however, who think that the bank will take some kind of action, mainly because of the strengthening of the shekel against the basket of currencies.
UBS estimates that the shekel is about to weaken, and sees a rate against the US dollar of NIS 4/$ within a few months. Macro analyst Michele Crema says the market has not lately priced in expectations of an interest rate reduction, and expects an interest rate rise in 2016. UBS also estimates that a rise in US rates is imminent, and that since the Bank of Israel's rate is about as low as it can get, the bank's expansionary monetary policy will consist of not reacting to the interest rate rise in the US.
FXCM Israel says in its daily market review that, from a technical point of view, the pressure on the shekel-dollar pair is increasing, and it is being traded at the lower limit of the NIS 3.8/$ level. "This has been a robust support level in the past month, and if it is broken through, that is likely to lead to strong downward movement towards NIS 3.77/$ and below."
As far as local interest rates are concerned, FXCM Israel believes that the Bank of Israel will leave its interest rate unchanged today. "This decision, although it is predictable, could provide an additional incentive to speculators to push the shekel-dollar pair below NIS 3.8$, because of lower expectations of a dollar rate rise. Given the critical importance of a breakthrough below the NIS 3.8/$ level, the Bank of Israel may have no choice but to intervene in trading at around this level, to prevent the appreciation trend from accelerating."
Published by Globes [online], Israel business news - www.globes-online.com - on June 22, 2015
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