The shekel significantly strengthened against the dollar and even more so against the euro on Tuesday as it extended its month-old advance on the two key currencies.
The dollar was set at a Bank of Israel rate of NIS 3.888, appreciating more than 0.6% from last Friday, marking the second time in five trading days that it has traded below 3.90 against the greenback. At 8 P.M. local time on Tuesday, the U.S. currency was trading at NIS 3.881.
Against the euro, the shekel gained 0.86% to a Bank of Israel representative rate of NIS 5.021. At 8 P.M. it was trading at NIS 5.010.
The shekel has been strengthening since the end of August, when it touched NIS 4.043 to the dollar, a gain of 3.8% in less than five weeks. Against the euro, the Israeli currency has appreciated close to 2% since September 13, when its representative rate was NIS 5.119.
The euro gained for a second session against the dollar yesterday, pulling further away from recent three-week lows on growing expectations that Spain is ready to seek a bailout.
European officials told Reuters on Monday that Spain was ready to request a euro zone bailout for its public finances as early as next weekend. Spanish Prime Minister Mariano Rajoy said yesterday a request was not imminent.
Another risk factor is rating agency Moody's soon-to-be announced review of Spain's rating, which could be cut to junk status. Analysts said safe-haven currencies like the dollar and the yen would be in demand until Madrid asked for aid.
The euro was 0.3% higher on the day at $1.2927 at 8 P.M. yesterday Israel time, rising from Monday's low at $1.2802, its lowest in three weeks.
The euro has eased from a four-month peak of $1.3169 in mid-September after the European Central Bank announce its bond-buying plan to lower yields on peripheral euro zone debt and the U.S. Federal Reserve teed up another round of monetary easing.
With reporting by Reuters
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