Dollar continues skid, trading at NIS 3.9003

US currency drops another half a percent after reaching nine-year low on Tuesday.

dollars bundle 224 88 (photo credit: Channel 10)
dollars bundle 224 88
(photo credit: Channel 10)
After reaching a nine-year low on Tuesday, the dollar dropped another half a percent on Wednesday morning, losing 0.56% and trading at NIS 3.876 before rallying slightly to 3.9003 in the afternoon. As the shekel rose against the beleaguered US dollar on Tuesday, the Israel Export Institute warned that the current weakness of the US currency was causing losses of billions of shekels to exporters, while threatening to significantly damage the competitiveness of the local export industry. "From the beginning of the year, exporters in the industry have reported losses of over NIS 1 billion as a result of the par between the expected exchange rate at the time of the performance of export orders and the actual exchange rate on the day of payment," said David Artzi, chairman of the Israel Export and International Cooperation Institute. "As a result of the continued weakness of the dollar, many exporters refrain from signing new deals or contracts committing them in the future," he said. "This situation could challenge Israel's competitiveness in a couple of months unless the government acts to restore the confidence of Israeli exporters." The shekel gained 0.4 percent against the US dollar on Tuesday to 3.88 and was trading at NIS 3.8915 on Tuesday night in Tel Aviv from 3.93 on Monday. The US currency slid to a record low on Tuesday against the euro ahead of the publication of a US home construction report, expected to show a slowdown pointing to a deepening property crisis. "The financial crisis in the US and worsening housing data is putting pressure on the US Federal Reserve to cut interest rates at its next month meeting and until then, the negative momentum of the US dollar is expected to continue," said Rafael Menasheof, currency strategist at Finotec. Menasheof said the appreciation of the local currency against the dollar has moved the shekel-dollar exchange rate below the psychological barrier of NIS 3.90 - a development that is leading to a loss of confidence in the US currency by exporters and property owners renting out apartments. Some analysts expect the shekel to continue to strengthen against the dollar. "In the medium-term, we expect the shekel-dollar exchange rate to break the next psychological barrier trading around levels of NIS 3.80 and NIS 3.75," said Rotem Davidovich, foreign exchange proprietary trading manager at Xpert Financial Group.