Shekel reaches NIS 3.06 to dollar

The shekel strengthened to a 26-year record NIS 3.06 to the dollar Wednesday, extending its “avalanche” against the world’s strongest currencies. Against the euro, the Israeli currency traded at NIS 3.46.

Foreign currency traders believe the Bank of Israel may have intervened in the market Wednesday to keep the currency from strengthening further, despite its preference not to buy more dollars.

The shekel has gained more than 4% so far this year, making it one of the top global currency performers of 2021. Since the beginning of the pandemic, the shekel has strengthened by about 10%.

The shekel’s strength has been attributed to a combination of factors, including Israel’s rapid economic recovery from the pandemic; a large current-account surplus that is expected to reach 5.5% of GDP in 2021, due largely to hi-tech sector sales; and massive foreign direct investment in the hi-tech sector.

While exporters are calling for the Bank of Israel to do more to weaken the shekel, analysts believe there is little likelihood it will make any significant moves.

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