Israel Currency Discussion Board

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USD falls to 5-year low vs the shekel
20.2.07 | 09:45 By Tal Levy
The dollar is weakening by 0.1% against the shekel in early trading on Israel's currency market, but that small dip is enough to lower the USD to 4.177 shekels.

On December 14, 2006, the dollar sank to NIS 4.176 in local trading. It was the lowest exchange rate posted for five years. The greenback had dipped even lower during the session that day, but clawed back a bit of ground before the official exchange rate was set.

The dollar has been sinking against the shekel since Thursday, when the resistance level of NIS 4.22 was breached, says Ilan Engel, manager of the Excellence Global Markets foreign dealing room. The trigger, Engel believes, was massive conversion of dollars into shekels ahead of Oil Refineries' privatization yesterday, while in parallel the dollar weakened in world markets.

Right now, also, players are highly optimistic about Israel's economic prospects for the year. Analysts have been raising their growth forecasts for 2007, to around 5%, and S&P raised its outlook for Israel sovereign credit rating, indicating that an upgrade could be in the offing.

"Yesterday we saw foreign investment banks buying dollars and selling shekels," says Engel, adding that trading turnovers in the forex market were relatively high yesterday, though there had been no trade on Wall Street. Also, he said, the market is in waiting more for the interest rate announcement due Monday.

While Israel's economy is booming, which supports the shekel, over in the States investors were dismayed to learn that the gargantuan American trade deficit is bigger than ever, that the influx of capital to the U.S. is lower than expected, and that retail sales were in a slump. Also, building starts were slow, Engel points out. The upshot is that the dollar is weakening in world markets, and here as well.

http://www.haaretz.com/hasen/spages/828158.html