Shekel Gains Stoke Speculation Bank of Israel Will Act
The shekel strengthened to an 18- month high versus the dollar prompting speculation that the Bank of Israel will step up dollar purchases to weaken the currency.
The shekel appreciated less than 0.1 percent to 3.6048 per dollar, the highest level since October 2011. The Bank of Israel said in a statement April 8, when the shekel rallied to as much as 3.5898 per dollar, that it had “acted” in the currency market.
Israel’s currency has been strengthening on prospects production of natural gas off the nation’s coast and government reforms will stoke economic growth. The shekel has climbed 3.6 percent against the greenback this year, the biggest advance among 13 Middle eastern currencies tracked by Bloomberg. The intervention April 8 was the first time the central bank had bought dollars to arrest shekel gains since July 2011.
“The shekel was at new lows back in early April before the central bank intervention drove it down,” Win Thin, global head of emerging markets strategy at Brown Brothers Harriman & Co. in New York, said by e-mail. “Now that we are testing those level again, I would expect more intervention.”
Israel’s economy will expand 3.4 percent this year after growing 3.2 percent in 2012, according to the median of 14 analysts’ estimates compiled by Bloomberg. The shekel is the best performer over the past six months of a basket of 31 major currencies compiled by Bloomberg.
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