The value of the Israeli currency, the shekel, continued to decline against the US dollar in morning trading Thursday, reflecting a serious downward trend in the state's economy, said reports.
Israeli sources said Thursday the shekel was sold in inter-bank trading at 4.30 shekels for a dollar, losing up to 2.5 percent of its value in the last two weeks.
Coming on the heels of Israel's financially exhausting occupation of south Lebanon, the latest Palestinian uprising against 34 years of military occupation has also sucked vitality from the state budget and economic ventures alike.
In the last two years, the dollar has been traded at around four shekels, with very small fluctuations. The American currency started gaining at the end of May 2001. Starting at around 4.1 shekels to the dollar, by the end of July it crossed the 4.2 shekel benchmark, and has jumped more than 2 percent since. In September it climbed 1.2 percent.
Sources in Bank Otzar Ha-Hayal's trading room told Haaretz that in the last few days, the buying and selling price of the dollar was relatively close.
It is mostly foreign banks and speculators that buy large amounts of dollars toward the end of trading in order to send the currency soaring, the sources said.
Volumes at the banks' trading rooms were large Wednesday, reaching $600-$800 million, according to estimates. The sources from Bank Otzar Ha-Hayal said that the dollar was gaining in part due to the escalation in the security situation in Israel and continued falls on the Nasdaq.
The latter fell two percent Wednesday, completing a 15 percent dive from the beginning of August.
Leaving a Knesset finance committee session Wednesday, Bank of Israel Governor David Klein said that the correct way to deal with the current outflow seen on the Forex market, and resulting in the sharp depreciation of the shekel, was "a stable macro-economic policy, attaching importance to reducing the burden of the budget deficit and the national debt, while maintaining price stability and completing reforms in the financial markets, particularly at this time."
The governor of the central bank said that the attraction of the dollar was due to foreign investors who had decided to invest less in Israel and were realizing part of their shekel assets.
According to Klein, no one can predict what the currency exchange rate will be, adding, however, that it was well worth studying the behavior of foreign investors – Albawaba.com
© 2001 Al Bawaba (www.albawaba.com)
