The dollar is falling again.

Is it possible to stop the trend?

The omicron panic has passed, markets have risen again - and the dollar, which has recovered for a moment, is in retreat again.

Manufacturers are under pressure, but it is precisely the large foreign exchange purchases of the Bank of Israel that prove that it is impossible to act against market forces over time.

Sonia Gorodisky

09/12/2021

Thursday, 09 December 2021, 10:00 Updated: 10:15

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The rises in the stock markets this week caused a change in the direction of the dollar against the shekel - the shekel strengthened again, and has risen by 2.3% since the beginning of the week.

The falls recorded last weekend on the US stock exchanges were erased as non-existent, and investors have meanwhile returned to breathe a sigh of relief in the absence of further bad news from the Omicron sector.

In Europe, too, Delta strain.

The high correlation between the recently formed dollar-shekel exchange rate and US stock markets caused the dollar to fall back to below -3.10 yesterday. This morning the dollar opened trading steadily at around 3.11 dollars.

According to estimates, the Bank of Israel who has already completed its purchase program totaling Of $ 30 billion, intervened in foreign exchange trading just earlier this week, and later this week the dollar may fall against the shekel.

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The dollar is falling again.

The Bank of Israel alone can not stop the global trend (Photo: ShutterStock)

According to the latest update of the Bank of Israel, and November's foreign exchange reserves reached a new high bank of nearly -209 billion, only last November he bought $ 4 billion.

Acquisitions The Bank of Israel's foreign exchange is an important tool that helps the central bank In halting the strengthening of the shekel, which is hurting exporters.

The high foreign exchange flow to the small Israeli economy, resulting from the booming exports, foreign investments in technology and the hedging of institutional entities that sell dollars against the shekel during periods of market upheaval - created a market environment that supports the shekel, which the Bank of Israel cannot stop. For that.

Modi Shafrir, Chief Strategist at Mizrahi Tefahot: "Institutionalists tend to sell foreign currency when global markets rise" (Photo: Yitzhak)

The Bank of Israel cannot defeat market forces

Modi Shafrir, Chief Strategist at Mizrahi Tefahot Bank,

explains in a conversation with Walla! Money: "A very high correlation between the Nasdaq index and the dollar / shekel has in the last two days supported a renewed and sharp strengthening of the shekel exchange rate, against the background of foreign exchange sales of institutional entities that manage pensions in Israel."

Shafrir expands: "Institutionalists tend to sell foreign currency as global markets rise to re-reduce their exposure to the dollar, and the sale of dollars by foreign entities, most of which estimate that the shekel will continue to strengthen in the coming year. Alongside the factors that support the continued strengthening of the shekel in the long term, we will note the significant increase in the volume of foreign investment in Israel, mainly in the high-tech sector, and the jump in the export of high-tech services. "

"Evidence for those 'basic forces' that support a strong shekel can be obtained from the fact that although the Bank of Israel purchased foreign currency worth $ 4 billion in November and over $ 34 billion since the beginning of the year, the shekel still strengthened against the currency basket by 2.4% in November and 8%. "Since the beginning of the year," says Shafrir,

"U.S. markets have risen in the past two days amid growing optimism that the Omicron variant will not have significant implications for the global economy, as initially feared. The new variant, although it is still only preliminary findings. "

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• Manufacturers

• Bank of Israel

• Mizrahi Bank