Shekel gains sharply as investors sell dollars

Israel’s foreign exchange market was stormy when it reopened this morning after the two-day Yom Kippur holiday, following sharp gains on Wall Street.

The shekel is strengthening sharply today against the dollar and is firm against the euro. In morning inter-bank trading, the shekel exchange rate is down 1.60% against the dollar at NIS 3.526/$ and down 0.16% against the euro at NIS 3.494/€.

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On Monday, the Bank of Israel set the representative shekel-dollar rate up 1.129% today from Friday, at NIS 3.5830/$, and the representative shekel-euro rate was set 0.402% higher at NIS 3.4998/€. This is the weakest that shekel has been against the dollar since April 2020, at the start of the economic crisis caused by the Covid pandemic.

On world forex markets, the dollar has weakened 0.3%-0.4% against the euro and sterling to $0.992/€ and $1.136/£, while it remains unchanged against the Japanese yen at $0.0069/¥ and the Chinese yuan at $0.14/CNY.

Prico Risk Management and Investments CEO Yossi Fraiman said, “The positive trend in the capital markets worldwide, as well as the determination of the Bank of Israel to tackle inflation and the rate hike on Monday, and the restrictions on the exposure of the holdings of institutional investors have resulted in the sharp and significant trading volumes on global stock markets immediately being expressed in the local arena. Institutional investors are selling major amounts of foreign currency as the value of their share portfolio rises, to create a hedging effect. The sale of foreign currency by Israeli exporters and companies that have raised foreign currency results in a significant current account surplus, with these companies needing shekels to pay salaries and taxes.”

Published by Globes, Israel business news – en.globes.co.il – on October 6, 2022.

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