The shekel is strengthening today against the US dollar and the euro and is at its strongest against the dollar since early April. In afternoon inter-bank the shekel is 0.73% lower against the dollar at NIS 3.697/$ and 0.63% lower against the euro at 4.002/€.
On Friday before Memorial Day and the Independence Day holiday, the Bank of Israel set the representative shekel-dollar rate up 0.081% from Thursday, at NIS 3.724/$, and the representative shekel-euro rate was set 0.022% higher at NIS 4.012/€.
Prico Risk Management, Finance and Investment CEO Yossi Fraiman says, "The weakening of the dollar in the world, alongside the supply of foreign exchange by (Israeli) exporters, had led to a surplus of dollars in the local market and the appreciation of the shekel. Foreign banks and Israeli banks have learned to take advantage of these situations, which brings a roller coaster ride and sharp fluctuations in exchange rates. In our estimation, the security situation may continue to lead to excess demand and depreciation of the shekel. So the local currency rate may continue to move within a wide range of rates."
Mizrahi Tefahot Bank chief economist Ronen Menachem says, "The strengthening of the shekel this morning reflects the sharp volatility of the currency recently. The appreciation of the shekel today comes with the latest inflation figures in the US and Israel and those figures could decide whether the shekel will continue to strengthen. Part of the strengthening of the shekel, adds Menachem, is due to the weakening of the dollar on international markets.
Don't forget the geopolitical situation
Menachem explains that the shekel is strengthening despite the negative security developments. "If, God forbid, there is another deterioration, the direction may well change." So far the activity of the IDF in Rafah, although media sources explain that this activity is limited in scope, has not resulted in significant movements in the foreign exchange market.
"It should be remembered that even after the strengthening of the shekel this morning, it is still a question of ongoing underpricing against the dollar. In view of all this, I assume that the shekel will continue to be volatile in the coming period and the Bank of Israel will closely monitor what is happening."
Published by Globes, Israel business news - en.globes.co.il - on May 15, 2024.
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