After reaching a six month high against the dollar yesterday, the shekel continued to weaken against the US currency in inter-bank trading today. The shekel-dollar exchange rate is up 0.27% at NIS 3.643/$. The shekel-euro exchange rate is up 0.73% at NIS 5.168/€.
The shekel has weakened by 7% against the dollar over the past six weeks.
In international markets, the dollar and the Japanese Yen are strengthening against the euro for the sixth consecutive business day, mainly as a result of concerns about the deep debt crisis in Europe. German Chancellor Angela Merkel's party lost in local elections in her home state, which clearly shows the German public's dissatisfaction with Germany's involvement in the Euro rescue program.
The significance for markets is clear: the possible separation of Germany from what is happening in Europe would almost certainly mean insolvency for some or all of the PIGS countries (Portugal, Ireland, Greece, and Spain). Deutsche Bank CEO and President Josef Ackerman said that current conditions remind him of the end of 2008 - and pressured European authorities to take steps to prevent another economic crisis.
"Everything around us is noisy and turbulent and I have no doubt that the crisis with Turkey has negatively affected the shekel," Bank of Jerusalem foreign currency dealing room manager Eitan Admoni told "Globes." "There is also the issue of the social protest and concern over reopening the budget. Add to this the global economic slowdown which will also reach Israel, and the expectation that interest rates in Israel will not only not rise over the next few months, but will fall - all of this affects the foreign currency market. Today, a scenario of NIS 3.3/$, which is what was expected until a few weeks ago, seems reasonable.
"The dollar surpassed the rate of NIS 3.63/$, which was a clear resistance level. If it surpasses NIS 3.68/$ we will also see it reach NIS 3.73/$Even if the dollar begins weakening globally, the regional and internal problems that we have here will continue to affect the dollar-shekel rate, but less. In two days time, President Obama will give a speech. If he delivers good news that will affect the economy, this could raise global stock markets and weaken the dollar, however this will only slow down the shekel's rate of depreciation against the dollar, and not reverse the trend. The main trend at the moment: the weakening of the shekel."
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