The principal reason for the dollar's continuous gains is demand from Israeli households, which are transferring assets from shekel deposit accounts and shekel-based mutual funds into dollar instruments. The trading floors of the major banks report this activity.
"It is not so much the absolute amount of demand for the dollar from the general public that is raising the market, but the general trend and the atmosphere it dictates," one trading room source stated. He added, "The market can absorb tens of millions of dollars in demand a day without any change in the exchange rate, but traders expect the trend to continue as greater and greater segments of the public decide to move into dollar-linked investments."
The commercial banks this morning reported a sense of confusion among customers, accustomed in recent years to depositing savings in shekel instruments. "They are completely confused. Some postpone any decision, but those who decide ¿ most of the money goes into currency-linked instruments, some to the stock exchange and only a tiny amount to CPI-linked instruments," one banker reported.