The shekel-dollar rate has broken through the NIS 3.9/$ level, as it also did intraday on Friday. The rate is currently up 0.51% in comparison with Friday’s representative rate, at NIS 3.9089/$. The shekel has weakened against the euro as well, with the exchange rate up by 0.48% at NIS 4.8599/€.
FXCM Israel says in its market review, “The shekel-dollar exchange rate is not stopping, and reaches new peaks almost daily. After breaking through the NIS 3.85/$ level last week, during the day on Friday it even managed to touch NIS 3.9/$. It seems that sentiment towards the shekel is at an unprecedented low, both because of the deteriorating security situation and because of the signs that the coalition is breaking up and the election atmosphere that is taking over the political arena. All this arouses concern on the market.
“The local market seems dominated by buyers only: on the one hand, those long on the dollar are not rushing to take profits, despite the price levels, while in current conditions no-one dares buy the shekel, even when there are technical opportunities for doing so. We are thus witness to a completely one-sided market.
“In the longer term, looking towards 2015, there is no escaping the view that this trend will continue, both because of the gap in economic growth between the US and Israel, and because of the fact that the US Federal Reserve is expected to start toughening its interest rate policy, whereas the Bank of Israel, in current conditions, is expected to leave its interest rate at virtual zero for a prolonged period.
“If there are early elections, or we see an escalation of the security situation, that will only worsen the shekel’s position. From the data currently available, it is hard to avoid the view that the shekel-dollar pair will spend 2015 above NIS 4/$.”