The foreign currency market was today marked by very volatile trade, and the shekel continued to lose ground against the dollar.
The representative exchange rate of the dollar was set at NIS 4.473, 0.8% higher than yesterday, which comes to a rise of more than 3.5 agorot.
The dollar today twice rose above NIS 4.48, reaching a peak of NIS 4.4850.
The representative exchange rate of the euro was set at NIS 4.0474, some 4 agorot higher than its representative rate on Wednesday. The euro has gained an aggregate 3.5% in the last two trading days.The representative exchange rate of the basket of currencies was set at NIS 4.5437, about 0.9% above its previous representative rate. The basket is today about 8.4% above the bottom limit of the mobility band governing the foreign currency market. At mid-day traders said that that the dollar is attracting lively trade and gaining ground against the shekel but added that trade is stable and calm. They said that the public is not panicking.
It is estimated that currency-linked funds have raised $300 million since the cut in lending rates. This means that only a tiny volume of the public's asset portfolio has moved from shekel instruments to dollar-linked instruments.
In recent days traders waited to see the dollar activity of foreign investors. The latter were not involved in the recent devaluation of the shekel. But foreign investors apparently expect the shekel's devaluation to continue. Thus, yesterday foreign investors participated in the acquisition of dollars. It is estimated that yesterday foreigners acquired several tens of millions of dollars.
"The newspaper headlines are scary, but so far the public is demonstrating maturity, and is not rushing to acquire dollars. The public has learned from experience that appreciation follows devaluation, and it is possible to lose on dollar investments," one trader said.
Traders expect the volatile dollar trade to continue. They estimate that in the coming week the dollar will trade at a wide price range of NIS 4.40 to NIS 4.50.
The demand for dollars has increased in recent days ahead of the redemption of dollar-based bonds in the amount of some $400 million, to be based on the dollar representative exchange rate on Friday.