ira

Citigroup: Will shekel follow the zloty?
“If the shekel’s path follows that of the zloty in 2005, an appreciation should follow reasonably soon.”
Globes’ correspondent 17 Jul 07 11:29
Citigroup compares the shekel with the Polish zloty in a new review on emerging markets, and suggests that an appreciation is likely soon.
Citigroup says, “The depreciation of the Israeli shekel since mid-May appears to us to have a number of similarities with the sell-off in the Polish zloty that took place in early 2005. Since that earlier sell-off proved to temporary, we think there is at least an argument that the shekel will soon resume its tendency to appreciate. Here are some of the similarities between the Israeli story and the Polish one:

The appreciation of the zloty in 2004-05 and the shekel in 2006-07 was in each case a market response to an economic recovery following a relatively strong investment recession in the early part of this decade;
In both cases, the investment recession of the early 2000s had been associated with a big depreciation of each country’s real exchange rate. In real, trade-weighted terms, the peak-to-trough move in the shekel was approximately 25% between October 2000 and October 2005. For the zloty, the equivalent depreciation was 29% between February 2001 and February 2004.
The sell-off of the zloty in early 2005 proved short-lived, only around six weeks, in which it lost approximately half of the amount it had gained during the rally. For comparison, the current sell-off in the shekel has produced a move that is also equal to around half the amount it had gained during the rally.”

josh007

Are you asking a question of just making a statement?

ira

This past summer is the first time in the history of Israel for the Israeli currency to appreciate against the dollar. It went from 4.6 shekel down to 3.9 to the dollar an appreciation of about 8%.

Now the dollar is about 4.25 shekel and moving back up. The question is which direction the dollar shekel relationship will move. Also what is the ramification of a strong appreciating Shekel.

ira

Shekel strengthens after Deutsche Bank report
The shekel-dollar rate fell 0.7% to NIS 4.255/$ in morning trading, and the shekel-euro exchange fell 0.5% to NIS 5.8815/€.
Adi Ben-Israel 19 Jul 07 12:27
The shekel strengthened against other currencies in this morning’s foreign currency market. The shekel-euro rate has retreated from its two-year high, and the shekel-dollar has fallen back from the NIS 4.30 barrier, after failing to break through it yesterday.
The shekel’s appreciation against the dollar is in line with the dollar’s weakness in global markets, following Federal Reserve Board Chairman Ben S. Bernanke’s comments to the House Financial Services Committee yesterday. He said core inflation should edge down a bit over the next year and a half, which traders took to mean that no interest rate hike was likely, which in turn caused the dollar to weaken.


In the Israeli market, traders responded enthusiastically to a survey by Deutsche Bank on the economy, which it called “one of the most robust economies in Europe, Middle East, and Africa region (EMEA).” The bank predicted a shekel-dollar exchange rate of NIS 4.10/$ at year-end, an reiterated its view that “the shekel looks cheap compared with fair value.”

In morning trading, the shekel-dollar exchange rate fell 0.7% to NIS 4.255/$, after falling 0.1% yesterday, and the shekel-euro exchange rate fell 0.5% to NIS 5.8815/€, after rising 0.04% yesterday.

Published by Globes [online], Israel business news - www.globes.co.il - on July 19, 2007

© Copyright of Globes Publisher Itonut (1983) Ltd. 2007

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josh007

I believe the Shekel will strengthen, and it will be good for Israel to have a strong currency if only the manufacturers would switch to the shekel instead of the dollar.