• Business

• news

Stormy foreign exchange market: "Bank of Israel buys time, the question is whether it will be enough"

The shekel is strengthening sharply against the euro and the dollar.

Kobi Levy, Head of the Marketing Strategy Desk at Bank Leumi: "Levels of NIS 3.30 that were once taboo, today are becoming the new normal"

Tags

• Bank of Israel

Guy Ben Simon

Tuesday, 09 February 2021, 10:22

• Share on Facebook

• Share on WhatsApp

• Share on general

• Share on general

• Share on Twitter

• Share on Email

0 comments

The foreign exchange market is tumultuous this morning following the highs set last night in the US stock market, along with the jump of the bitcoin to a peak. Following the utilization of about a quarter of the Bank of Israel's acquisition plan for 2021, earlier this week, Governor Amir Yaron 2021. However, the market estimates that the Bank of Israel's foreign exchange acquisition program is expected to provide some of the forces working to appreciate the shekel in the short term, but in the long term, the basic forces (such as: current account surplus, Israeli issues abroad, acquisition of Israeli companies Foreign exchange, direct investment and more) still support the continued appreciation of the shekel, with the

dollar losing 0.8% against the shekel to NIS 3.256, the euro losing 0.4% to NIS 3.933.

Kobi Levy, head of the market strategy desk at Bank Leumi, said in a conversation with Globes that "the dollar has made moves at home and abroad, but at the moment it is not a dollar move but a strengthening of the shekel. Already yesterday a flood of sellers began. Most of the market understands this is normal But the one that offsets this is the Bank of Israel. The open question is whether it will be able to maintain this pace later in the year. The basic forces of the economy support strengthening, on the other hand the Bank of Israel is making massive, grandiose and correct moves. "Buying foreign currency, the question is whether the Bank of Israel's determination will suffice."

And the price is surprising

In less than half an hour you have an accurate solution to leg and back pain

To the full article

Conducting a daily war.

Governor of the Bank of Israel Prof. Amir Yaron (Photo: Reuters)

"Traders sell foreign currency more than they buy shekels.

We see this developing in the market in the last month and we need to look at who helped the shekel reach NIS 3.30 - and it is the Bank of Israel that announced the acquisition plan for 2021. It should be emphasized that this is at least $ 30 billion (with the possibility of more than that - GBS).

The Governor said this yesterday, the Deputy Governor Andrew Abir said this before, and this is what has happened in the past, Governors have ended the year beyond the threshold set first.

In January alone, the Bank of Israel purchased about 20% of the amount of purchases, which means that it may soon reach the quota it set soon.

Israel enjoys a current account surplus of about $ 20 billion, which means that much of the money that the Bank of Israel is going to invest will be deducted from this cash flow.

"However, it seems that $ 30 billion will not be enough on the assumption that the flow of foreign currency to Israel will continue at the same pace," Levy said.

"Technically, a point has been created where dollar sellers are willing to sell dollars at the level of NIS 3.30. The Bank of Israel has bought and those who sold dollars to it are mainly local entities. As the exchange rate rises, there are more sellers who are willing to sell the dollars. There were taboos, today they are becoming the new normal, "Levy said.

Regarding the fiscal expansion of the U.S. aid program, U.S. bond yields have risen sharply. “This was supposed to happen in the past and whoever prevented it was the central bank in order to keep the yield curve flat.

"The central bank has changed its perception nowadays and it is a kind of cautious step to reduce the Fed's involvement, a gentle passive monetary contraction that may continue in a measured way in the tapering and interest rate hikes for many years to come," Levy said.

• Share on Facebook

• Share on WhatsApp

• Share on general

• Share on general

• Share on Twitter

• Share on Email

0 comments