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Forex Forecast- try saying that three times fast! The Market Oracle, an online financial publication, has done even better, preparing a one-year forecast for all of the major currencies along with a detailed analysis of the major factors driving each currency in the month of February. The Dollar and Yen are projected to be the strongest performers in this time frame, benefiting from a trend towards risk aversion. It should be noted that this prediction is consistent with news reported by the Forex Blog earlier this week. On the other hand, currencies that have been propped up by the Yen carry trade, namely those of Australia, New Zealand, Canada and South Africa, will face selling pressure. The British Pound is projected to underperform slightly, due to an easing of British monetary policy, which will narrow the interest rate advantage claimed over the US. |
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Dollar falls as Fischer says won't intervene in currency market |
After showing signs of recovery earlier this week, the U.S. dollar once again fell sharply against the shekel in trading Friday, dropping 1.2 percent to close at NIS 3.611. The Bank of Israel also reported a precipitous drop in the value of the Euro, which fell 2.1 percent to close at 5.2296 NIS.
"Intervening in [the currency] market is risky and inefficient," Army Radio quoted Bank of Israel Governor Stanley Fischer as saying earlier this week.
Despite exporters' hopes, no decisions were taken concerning ways to combat the effect of the dollar's fall on the Israeli economy at Thursday's meeting between Fischer, Prime Minister Ehud Olmert, Finance Minister Roni Bar-On, Trade and Industry Minister Eli Yishai.
The three did not ask Fischer to intervene in the foreign exchange markets. Exporters and the Histadrut labor federation had earlier raised the possibility of the central bank lowering interest rates to make the shekel less attractive, or even direct intervention in currency trading.
The meeting revolved around exporters' demands for the bank to help halt the dollar's fall, but no practical steps were decided upon. |
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Israel Considers Intervention |
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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. Haaretz.org reports: |
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