The shekel-dollar rate continued its non-stop climb Monday and reached beyond 3.64 shekels to the dollar but is near a short-term resistance level of 3.66
The rate two months ago was 3.40, and analysts were predicting a further drop, but The Jewish Press reported here before the recent rise that the situation of everyone being of the same opinion was a sure sign that a reversal to the upside was in sight.
However, our previous report saw resistance around 3.62, a level that easily was broke but still is only 2 cents from the next level of 3.66
The dollar has risen against almost all foreign currencies this summer after years of being in the doldrums. The Federal Reserve Bank has given clear signals that the near-zero prime interest rate will rise next year, which will give investors a higher return for putting dollars in the bank.
The shekel had been strong, translated into a low shekel-dollar rate, for several years until this summer. The Israeli currency was strengthened in part by the prospect of Israel becoming an exporter of natural gas, but a slowdown in the economy, hastened by the war in Gaza, regional turmoil, and the tough government choice of having to raise taxes or the debt ceiling have combined with the strong dollar to send the shekel-dollar rate north.
This is good news for anyone with money in shekels or who gets paid in dollars because the conversion rate back into shekels is becoming higher each day.
That is equally true for Israeli-based international companies, whose earnings have taken a hit in recent years because of a decline in the shekel-dollar rate.
A cheaper shekel helps increase exports and tourism because more dollars buy more shekels.
On the downside, the higher shekel-dollar rate reflects pessimism over the local economy, which until last year was one of the strongest and most stable in the world, surviving quite well even the global bust in 2008.
“The economy is slowing down sharply, and when you combine this with the fact that Israel is part of the global picture, it’s likely that the shekel will continue to weaken,” Robert Carmeli, overseas funds manager at Migdal Capital Markets to told Globes business newspaper.
He and others are predicting that the shekel-dollar rate will approach 3.80 by the end of the year.