Remarkable shekel-dollar stability suggests BoI intervention
The shekel is stable today against the dollar and against the euro. In late morning inter-bank trading the shekel-dollar exchange rate was up 0.02% at NIS 3.4007/$ and up 0.07% against the euro at NIS 4.007/€, Trend reports with reference to Globes.
Yesterday, the Bank of Israel set the shekel 0.059% down from Monday at NIS 3.400/$, and the representative shekel-euro rate was set 0.293% lower at NIS 4.017/€.
The shekel-dollar rate dipped briefly below the key psychological barrier of NIS 3.400/$ in afternoon inter-bank trading yesterday before the rate was set exactly on NIS 3.400/$. The remarkable stability in the shekel dollar rate over recent weeks suggests that the Bank of Israel is purchasing major amounts of foreign currency to weaken the shekel and under no accounts to let the Israeli currency fall below NIS 3.40/$.
Throughout August the shekel-dollar rate has not moved above NIS 3.424/$ and for the past two weeks it has traded within the incredibly narrow range of NIS 3.40/$ and NIS 3.41/$. In the past three months, despite all the volatility caused by the Covid-19 pandemic, the shekel-dollar rate has traded in the NIS 3.40/$-NIS 3.50/$ range.
The shekel has also been very stable against the euro this month, trading in the narrow band between NIS 4.00/€ and NIS 4.06/€.
In the three months between May and July, the Bank of Israel bought $5 billion in foreign currency to weaken the shekel and help exporters, bringing Israel's foreign currency reserves to a record $157.7 billion. Despite the Covid-19 pandemic and the shrinking of the economy, Israel is still outperforming most OECD countries and it remains to be seen how far the Bank of Israel will go in its attempts to keep the shekel-dollar rate above NIS 3.40/$.