Analysts divided on whether BoI can curb the shekel
The Bank of Israel fears for exports and jobs, but are massive foreign currency purchases effective help?
Will the Bank of Israel's new and dramatic policy succeed in halting the appreciation of the shekel? The announcement by the central bank on Thursday that it would buy $30 billion in 2021 caught the market by surprise. The immediate reaction to the announcement was a reversal of the trend, as the shekel-dollar exchange rate shot up: from a low of NIS 3.13/$ on Wednesday to NIS 3.26/$ at the close of trading on Friday. The sharp rise is attributed to investors who rushed to close positions (through stop-loss orders). But the assessment for the coming week is that the rate will drop somewhat and the shekel will resume its appreciation.