The shekel has strengthened against the US dollar at the start of the trading week on the foreign exchange market, and is flat against the euro. The shekel-dollar rate is currently 0.38% below Friday's representative rate, at NIS 3.5048/$, while the shekel-euro rate remains ta NIS 4.7961/€.
In its daily market review, the research department of FXCM Israel provides a forecast of trends on the foreign exchange market in 2014. "On the face of it, the tapering of the US Federal Reserve's quantitative easing program should help to make the dollar firmer," the FXCM analysts write, "It is important to remember, however, that the US central bank stressed its commitment to keeping the dollar interest rate at zero in 2014 as well, and probably also in 2015. A zero interest rate puts the dollar in an inferior position, in terms of return, in relation to just about every other currency in the world or every other financial asset. Therefore, if stock markets continue to climb and we see positive risk sentiment on world markets, the dollar will continue to weaken, despite growing faith in the US economy.
"The trend in the shekel-dollar rate has not always matched the global trend in the dollar, with the rate oscillating between stagnation and decline for most of 2013. In 2014 too, the dollar exchange rate will continue to be a headache for decision makers at the Bank of Israel and in the government. The NIS 3.47-3.50/$ range currently represents a support range. Unless the Bank of Israel manages to defend it, the rate is liable to drop to levels that will be a significant threat to exports and to the entire Israeli economy."
Published by Globes [online], Israel business news - www.globes-online.com - on December 23, 2013
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