Options trading is pointing to a 0.33% rise in the shekel-dollar exchange rate to NIS 3.973/$, and to a 0.71% rise in the shekel-euro exchange rate to NIS 5.5612/€. There is no inter-bank foreign currency trading on Sundays.
The shekel-dollar exchange rate has fallen significantly in recent weeks. The representative shekel-dollar exchange rate ended 2008 at NIS 3.802/$, and peaked this year at NIS 4.256/$ on April 28, before falling to its current level.
One year ago, the representative shekel-dollar exchange rate was NIS 3.33/$, near a multi-year low of about NIS 3.23/$.
Union Bank economists say that especially now, when the feeling is that the worst is behind us, and investors again are seeking higher-risk, higher reward investments, speculators are returning to the foreign exchange market and causing sharp volatility and drops in prices. At the same time, they say, despite the dollar' weakness and subsequent fall in the shekel-dollar rate, "It is hard to assume that this is a trend that will lead to drops to levels of last year. Sharp movements can bring the dollar higher just like they pushed it lower."
The economists add, however, that maintaining a level below NIS 4-4.02/$ can send the dollar further down. But then, they say, the Bank of Israel will continue to buy dollars.
On Friday, the Bank of Israel set the representative shekel-dollar exchange rate 1.419% lower at NIS 3.96/$, and set the representative shekel-euro exchange rate 0.155% lower at NIS 5.5222/€.
Published by Globes [online], Israel business news - www.globes-online.com - on May 24, 2009
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