The shekel is rallying from recent drops against the dollar to NIS 4.5770, after the dollar for several days posted record highs.
Earlier today, the shekel rose to 4.5680, but renewed demand for dollars soon eroded the shekel back to NIS 4.5770, a 0.56% gain against the dollar's representative rate of exchange.
On Wednesday, the representative rate reached a record high of NIS 4.6030, while the dollar had even climbed to NIS 4.61 in intra-bank trading.
Traders said that the dollar exchange rate of NIS 4.60 is establishing itself as the new technical resistance level. They expect that the dollar will drop further, before breaking through this level on a new upswing.
The traders said that the dollar eroded against the shekel due to sales by local banks. They said that turnover is not high.
Bank Leumi forex head of trading Ilan Viskin yesterday said the market's liquidity is still good, and there is a balance between buyers and sellers. But a big deal of $100 million to $200 million could result in a quick devaluation of 1%, and to liquidity loss.
Meanwhile, Thursday trade is stable despite scary newspaper headlines that speak of continuing dramatic shekel devaluation. Acquisition spreads are relatively limited, and the daily volume of trade is lower than $1 billion. The options standards deviations have mildly decreased.
In trading rooms the word is that there is no panic in the market and that trade is running properly.
One trader commented that the market is packed full with dollars, so dealers are waiting for someone to come and buy. He said that after the record highs the dollar reached in recent days many companies are profit taking. The trader estimated that the potential profit taking has not yet been exhausted.