Forex Blog: Currency Trading News & Analysis.

February 18th 2008

Israel Considers Intervention

The Israeli Shekel has surged over 15% against the Dollar in the last six months, and by over 20% in the last two years. Analysts have suggested that the appreciation is due to the strength of Israeli’s economy vis-a-vis the US economy, which seems headed for recession.  In addition, Israeli citizens have repatriated billions of dollars in capital that had been held overseas and invested it in Israel’s financial markets, which in itself, has exerted much of the pressure on the Shekel.  There is now a surplus in the balance of payments, which means more capital is coming in to Israel than is being taken out.  As a result, Israeli exporters are getting nervous about the perceived consequences of a relatively expensive currency and are pressuring Israeli political leaders to take action.  The Central Bank, understandably, is reluctant to do so. reports:

"Intervening in [the currency] market is risky and inefficient," [said] Bank of Israel Governor Stanley Fischer…earlier this week.

Read More: Dollar falls as Fischer says won’t intervene in currency market

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