Sunday was one tumultuous day in the dollar shekel arena, and it shows in trade figures: total turnover was nearly 70,000 options, indicative of the fact $700 million worth of foreign currency positions exchanged hands, and the shekel devaluated further to NIS 4.7 to NIS 4.72, depending on the option.

Though a 70,000 option turnover may not be a record, but for a Sunday, in which no foreign currency trading takes place in the banks and around the world, it is exceptional and can have but one meaning: the capital market continues to increase its exposure to the dollar.

While local and foreign banks and export companies prefer to buy and sell currency to one another, the capital market (mutual funds, pension funds, insurance companies and portfolio managers) prefers to work through the stock market. These very institutions were yesterday's movers and shakers.

Dealers reported a single institutional investor responsible for most of the purchases. Unlike the spot market, in which it is easier to identify the source of the transaction, this time players were unable to name the buyer. Yet it was clear his purchases inspired other investment managers, who followed his example and bought dollar exposure for the exorbitant price of NIS 4.7, which is apparently why it happened so high today, as some dealers inactive yesterday had to get their option portfolios in line with the new rate.

At the macro-economic level, news that made it to the markets acted against the shekel; terror attacks, sharp stock market declines triggering fears of foreign investors flight, the many responses to the budget deficit less than a week after the budget's approval and the news of possible capital gains tax, all bore heavily on the shekel. For a few weeks now reports have had monies are leaving the country, a trend that unless stopped, could have a strong psychological effect.

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