Israel's shekel hits nine-year record high against dollar

The Israeli shekel hit a nine-year record high against the dollar on Thursday, set at NIS 3.369 for $1.

The rate is the lowest for the dollar since June 2011, when the exchange rate for 1 dollar was set at 3.363.

This record is not only because the shekel is getting stronger, but more because the dollar has been weakening worldwide against the major currencies over the past few months as the US Fed prints money to cope with the coronavirus crisis.

"The jump of the shekel against the dollar strengthens the purchasing power of Israeli citizens, as their salaries are paid in shekel," said Gad Lior, senior analyst for Ynet.

According to Globes, the large number of Israelis who are normally travelling abroad in the summer and stayed at home in Israel this year because of the corona crisis and the travel restrictions is one of the main reasons why the shekel became so strong.

Prico Risk Management and Investments CEO Yossi Fraiman noted that "The Bank of Israel has recently been purchasing foreign currency to halt the appreciation of the shekel beneath NIS 3.40/$. The Bank of Israel was forced to buy billions of dollars and push up its foreign currency reserves to $157 billion. The Bank of Israel has decided to temporarily halt its intervention measures and to allow the dollar free movement and the dollar has dived sharply."

"The halt in the Bank of Israel's intervention in foreign currency trading could open the way for the shekel to appreciate to its historical low (but strong) level of NIS 3.20/$ in 2008," continued Fraiman.

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