Trading in the shekel-dollar exchange rate was stable in morning inter-bank trading, until the Bank of Israel intervened in the market buying a massive amount of foreign currency. Market sources had predicted an intervention in order to boost the shekel-dollar exchange rate to NIS 3.80/$, but the vast scale of the intervention had not been anticipated.
Market sources estimate that the Bank of Israel bought more than $800 million today. One dealer in the foreign currency trading room said, "The Bank of Israel just didn't stop buying." As a result, the shekel weakened, with the shekel-dollar exchange rate up 0.6% to NIS 3.78/$, and the shekel-euro exchange rate up 1.62% to NIS 5.478/€. After the exchange rate was fixed the shekel continued to weaken, reaching NIS 3.8/$.
Sources inform "Globes" that the Bank of Israel has secretly decided that the exchange rate should not fall below NIS 3.8/$
On Friday, the shekel-dollar exchange rate fell below NIS 3.75/$, as currency speculators battled. The Bank of Israel did not intervene, but kept abreast of developments behind the scenes.
A trader told "Globes" today, "Fischer is buying and all the foreigners are selling to him. They're going to teach him a lesson, as usual."
In a foreign currency report today, Barclays Capital predicts that the dollar will weaken in the aftermath of a declaration by the UN that the dollar's standing as the world's reserve currency should be reduced. "We continue to predict the gradual demise of the dollar. However, as of now, there are few alternatives to the dollar as the world's leading reserve currency."
Published by Globes [online], Israel business news - www.globes-online.com - on September 8, 2009
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