With Israel’s Shekel rising 6.1% against the world’s major currencies during the past year and nearing historically high levels, the Bank of Israel is expected to depreciate the shekel to boost exports.
The Israeli shekel is currently the world’s second-strongest currency, according to a new report by German global banking and financial services company Deutsche Bank. The report ranked China’s yuan as the world’s strongest currency.
Deutsche Bank’s strategic foreign currency analyst Dr. Gautam Kalani reported that over the past 12 months, the shekel has appreciated 6.1% against the basket of currencies of Israel’s main trading partners, such as the U.S. dollar, the British pound, the euro and the yen.
The report recommended short positions for shekel investors – a technique used when investors predict the value of a stock or currency will decrease in the short term – saying the Israeli currency is nearing historically high levels.
The firm issued a similar recommendation in late June, inspiring a depreciation in shekel rates, mostly over foreign currency purchases by the Bank of Israel. This move is common whenever it appears the shekel may become so strong it could undermine exports.
The shekel bounced back despite continued purchases by the central Bank of Israel, whose foreign currency reserves have already crossed the $110 billion mark. The bank has sharply cut its foreign currency purchases in recent months, but Deutsche Bank believes it will most likely resume its intervention in the forex markets in the next few weeks.
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