Shekel devaluation continued today as the representative exchange rate was set at NIS NIS 4.553, a 4 agorot or 0.84% rise from Friday¿s NIS 4.5150 representative exchange rate. The dollar has continued to climb since the representative rate was set, and is currently trading at NIS 4.557.
Dealers report that the dollar is strengthening primarily on comments by Bank of Israel governor David Klein to Hebrew daily Ha¿aretz in which he stated he would not raise interest rates even if inflation expectations were 1% above the inflation target. Klein told the paper that Bank of Israel has no exchange rate target and even devaluation to a NIS 5 dollar rate would not shock him. Dealers today stated the comments indicate Klein expects continued shekel devaluation and will serve to strengthen the dollar.
One trader stated that the overall trend in the dollar is upward, so any drops are temporary and offer good buy opportunities.
Traders also noted that the falling Nasdaq and TASE help fortify the dollar, and political tensions create demand. Most economists assess the dollar will trade on a gradual climb this week.