With the dollar continuing to plunge against the shekel, the Bank of Israel took an unusual proactive measure of purchasing dollars.
The Bank of Israel's representative rate (shaar yatzig) was set on Thursday afternoon at just over 3.4 shekels to the dollar - the lowest it's been since May 30, 1997, nearly 11 years ago. It had even dipped to slightly below 3.4 for much of the day's trading.
The new rate was a drop of 2.27% in one day. It has dropped 5.47% over the past six days, and more than 11% since the beginning of the year.
The euro also continues to lose ground, closing at 5.2949 shekels to the shekel, 4.52% than six days ago.
For the first time in over ten years, the Bank of Israel purchased an unreported amount of dollars in an attempt to put the breaks on the greenback's slide.
Globes Business News reports that the effects of expected interest-rate cuts in both the US and Israel, making each currency less attractive, could cancel each other out.
Klein: Watch Out!
Former Bank of Israel Governor David Klein said earlier Thursday morning that the dollar's recovery is inevitable and "might not necessarily be gradual." There is a good chance that the dollar will rebound sharply, Klein told Globes, and "the trend will change eventually. The dollar will recover, and anyone who has exposure through positions could suffer heavy losses."
Klein said that the change would occur "once investors start believing that the change is long-term, not an isolated event. We're already seeing the first signs of this. In recent months, the US balance of payments has stopped increasing, and in some months US exports exceeded imports. The US has had a balance of payments deficit for a good many years, and as long this deficit grows, the dollar will remain low."