The shekel is strengthening for the second successive day against the dollar and against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate was down 0.57% from yesterday's representative rate at NIS 3.834/$, and down 0.30% against the euro at NIS 3.99/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.284% today compared with yesterday's representative rate at NIS 3.856/$, and the representative shekel-euro rate was set down 0.705% at NIS 4.002/€.
The euro was launched on January 1 1999 when the exchange rate against the shekel was fixed at NIS 4.90/€. The rate only ever fell below NIS 4/€ very briefly in January 2003. The euro is struggling now because of increased terror in Europe, Brexit and more recently the ECB's decision to continue monetary expansion policies and the US Federal reserve's decision to raise interest rates.
The devaluation of the euro hits Israeli exporters hard with more than 33% of exports sold in Europe.
Since the beginning of the year, the shekel has strengthened 2.5% against the dollar and 18% against sterling.
On the dollar, FXCM Israel said this morning, "After peaking at NIS 3.88/$ last week, the shekel-dollar exchange rate has corrected sharply downwards to NIS 3.84/$ due to profit taking. On world markets the dollar is stable at 14-year highs. Last night US Fed chair Janet Yellen said that the US job market is in its best state for 10 years and salaries are expected to rise. This comment by Yellen, who is usually reserved in her remarks, only increases expectations regarding interest rate hikes in 2017."
Leumi Capital Markets trading desk manager Ronny Gitlin said, "While the dollar is breaking records against almost every currency, the shekel retains its strength. Since 2008, the Bank of Israel has intervened to buy $7-9 billion in foreign currency per year. Despite this the shekel is at a 15 year high against the basket of other currencies."
Published by Globes [online], Israel business news - www.globes-online.com - on December 21, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016