The shekel is mixed against the major currencies this morning. The shekel-dollar exchange rate is currently up 0.17% in comparison with Friday's representative rate, at NIS 3.7986/$, while the shekel-euro rate is down 1.11%, at NIS 4.2036/€.
Banks in Greece will not open today, and will remain closed for a week, the Greek government decided yesterday. The Athens stock exchange will also be closed, and restriction have been imposed on the amount of cash that can be withdrawn from ATMs in Greece. Greek prime minister Alexis Tsipras called on Greeks last night to "remain calm" and promised that their bank deposits were safe.
Former chief executive at Pacific Investment Management Co. Mohamed El-Erian told Bloomberg that Greece was heading for "a massive economic contraction". He estimates the chances of Greece leaving the euro zone at 85%. “What we are seeing here is what economists call the sudden stop, when the payment system stops. The logic of a sudden stop is a massive economic contraction, social unrest and it’s going to make continued membership of the euro zone very difficult for Greece," El-Erian said.
FXCM Israel says in its market review this morning, "The trading week opened against the background of the breakdown in negotiations between Greece and its creditors. The decision by the Greek government to refer the matter to a referendum tears up the cards, especially as it presented the European proposal as humiliating and as amounting to a loss of Greek sovereignty.
"The undermining of stability in Europe is likely to make investors flee European assets in favor of dollar assets, which will strengthen the dollar, including against the shekel.
"On the technical level, after the collapse by the shekel-dollar pair early last week to a low of NIS 3.74/$ after the Bank of Israel decided to maintain its interest rate unchanged, in the past two sessions we have seen a sharp upward correction towards the NIS 3.8/$ threshold. A climb above NIS 3.8/$ is likely to spur investors to push the pair upwards towards NIS 3.83/$ and NIS 3.85/$."
Published by Globes [online], Israel business news - www.globes-online.com - on June 29, 2015
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