The shekel is strengthening sharply against the dollar and the euro in inter-bank trading this morning. The shekel-dollar exchange rate is trading down 1.36% at NIS 3.941/$ and the shekel is trading down 0.62% against the euro at NIS 4.474/€.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.995/$, down 0.075% on Monday's rate, and set the shekel-euro representative exchange rate at NIS 4.502/€, up 0.269%.
FXCM Israel said this morning, "The fall in the shekel-dollar exchange rate is strengthening and the rate has fallen below NIS 3.95/$. It now seems that breaking above the NIS 4/$ barrier at the start of the week now looks like a false breakthrough, and it is likely that the fall will accelerate towards NIS 3.93/$. Everything depends on the results this evening of the US Federal Reserve meeting to consider the interest rate. Worldwide, we have also seen the weakening of the dollar over the past day on the growing assumption in the market that the Federal Reserve will this evening temper its hawkish rhetoric, and against the background of the quantitative expansion of the European Central Bank, the fall in commodity prices, and the high volatility on global markets."
"At its last meeting the Federal Reserve spoke explicitly about raining interest rates in the near future. If the Federal Reserve does temper its rhetoric on raising interest rates, then the dollar is expected to weaken against all major currencies including the shekel. On the other hand, after the euro's sharp weakening in recent days, it has stabilized somewhat, despite the soon expected quantitative expansion, and the uncertainty caused by the Greek election results. Because of these reasons the euro should continue depreciating. The shekel-euro exchange rate has risen in the past two days but did not succeed in climbing back above the NIS 4.5/€ threshold, and negative pressure is still high."
Published by Globes [online], Israel business news - www.globes-online.com - on January 28, 2015
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