In a sign both of Israel's burgeoning economy and the general weakness of America's currency, the representative shekel-dollar exchange rate, as determined by the Bank of Israel, was 4.195 shekels to the US dollar on Friday.
The recent dramatic devaluation of the dollar in relation to the shekel is a continuation and intensification of a downward trend that began over March and April of this year.
In contrast, the euro valuation against the shekel, while seeing some drops along the way, has shown a general upward trend over the last month, with the representative rate set at 5.5802 shekels to the euro on Thursday. From Tuesday to Wednesday, the euro-shekel exchange rate dropped by 0.93%, yet the euro gained against the shekel on Thursday by 0.057%.
The slipping dollar has reduced inflation to zero in Israel, since housing prices, which are usually quoted in US funds, have become cheaper. The bargain prices have led to a recent boom in real estate sales. The robust performance of the Israeli economy, in general, was barely dented by this summer's war in Lebanon.
Economic analysts from Migdal Forex, established by the Migdal Capital Markets investment management group, warned that the dramatic strengthening of the shekel may lead to an equally dramatic devaluation in the not-distant future.
"Despite the strong trend," the Migdal analysts said, "it must not be forgotten that as much as the shekel continues to strengthen, the reversal of the trend could be powerful indeed. Because external speculative investors are involved in this market, as soon as they decide that it's enough, an aggressive change towards a weakening of the shekel could take place."
At the same time, global currency market analysts have noted that the US dollar has been losing value against other currencies worldwide since the summer. Among the reasons for this trend that have been cited by economic analysts are a weakening US economy, concerns that the US Federal Reserve will be forced to cut interest rates to stave off a recession, political shifts of perception of the American mission in Iraq, uncertainty regarding the new Democrat-led Congress, Chinese economic reserve policies that are not dependent on the dollar and a strengthening Chinese yuan in 2006.
The recent dramatic devaluation of the dollar in relation to the shekel is a continuation and intensification of a downward trend that began over March and April of this year.
In contrast, the euro valuation against the shekel, while seeing some drops along the way, has shown a general upward trend over the last month, with the representative rate set at 5.5802 shekels to the euro on Thursday. From Tuesday to Wednesday, the euro-shekel exchange rate dropped by 0.93%, yet the euro gained against the shekel on Thursday by 0.057%.
The slipping dollar has reduced inflation to zero in Israel, since housing prices, which are usually quoted in US funds, have become cheaper. The bargain prices have led to a recent boom in real estate sales. The robust performance of the Israeli economy, in general, was barely dented by this summer's war in Lebanon.
Economic analysts from Migdal Forex, established by the Migdal Capital Markets investment management group, warned that the dramatic strengthening of the shekel may lead to an equally dramatic devaluation in the not-distant future.
"Despite the strong trend," the Migdal analysts said, "it must not be forgotten that as much as the shekel continues to strengthen, the reversal of the trend could be powerful indeed. Because external speculative investors are involved in this market, as soon as they decide that it's enough, an aggressive change towards a weakening of the shekel could take place."
At the same time, global currency market analysts have noted that the US dollar has been losing value against other currencies worldwide since the summer. Among the reasons for this trend that have been cited by economic analysts are a weakening US economy, concerns that the US Federal Reserve will be forced to cut interest rates to stave off a recession, political shifts of perception of the American mission in Iraq, uncertainty regarding the new Democrat-led Congress, Chinese economic reserve policies that are not dependent on the dollar and a strengthening Chinese yuan in 2006.