July 09--As Operation Protective Edge enters its second day, the shekel continued to weaken for the second-straight day in interbank trading this morning against the dollar and the euro.
The shekel-dollar rate was up 0.17% at NIS 3.435/$ and the shekel-euro rate was up 0.29% at NIS 4.676/euro.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.429/$, up 0.205% on Monday's rate, and set the shekel-euro representative exchange rate at NIS 4.662/euro, up 0.191%.
FXCM Israel Research Department said this morning, "The shekel-dollar rate is correcting upwards for the second consecutive day and the two currencies have corrected two thirds of the recent falls. There are several reasons for the current correction -- global, technical and in recent days the security situation escalation must be added which increases the geopolitical risk of the shekel."
FXCM added, "On a technical level after the rate was set last week below NIS 3.4/$, the two currencies had reached an extreme position and over-sellers and short-traders decided to realize their profits."
FXCM continued, "The swift escalation of the situation and the real danger that the operation will broaden with a ground offensive increases concerns among investors and weighs on the shekel. A rise above NIS 3.44/$ might see the correction expand towards NIS 3.47/$. In the current circumstances, there is a high likelihood that the shekel-dollar correction will continue.
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