The market speaks for itself: Israeli shekel, stocks down on Gaza attacks
The stock market is also down, with the Tel Aviv 25 Index currently off 0.58%.
The shekel has weakened against the dollar this morning, as the security situation in the south of Israel escalated overnight. The shekel-dollar rate is up 0.23% in comparison with yesterday's representative rate, at NIS 3.4298/$, and the shekel-euro rate is up 0.13%, at NIS 4.6594/€. The stock market is also down, with the Tel Aviv 25 Index currently off 0.58%.
Prico CEO Yossi Fraiman says in his market review this morning, "Because of the security escalation and the fact that many market players have left for summer vacations, leading to low trading volumes, there is potentially greater volatility. In our view, on the basis of past experience, the market tends to respond to events of economy-wide significance, and so as long as events continue to have no significance for the economy as a whole, and do not shut down activity in any substantial way, the foreign exchange market can be expected to continue to behave tensely, waiting on developments, with players tending to avoid excessive exposure to the effect of events in the security arena."
Fraiman estimates that, given the high level of intervention by the Bank of Israel as the shekel appreciated towards the NIS 3.4/$ level, in the short term the central bank will continue to maintain the NIS 3.4-3.42/$ range as a defensive line against a repeat of the sharp appreciation seen in the summer of 2011, when the shekel-dollar rate reached NIS 3.35-3.38/$.
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