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In synchrony with currency trends worldwide, the U.S. dollar continued to lose ground against the shekel yesterday.

The representative exchange rate of the dollar against the shekel fell 1.8% yesterday to NIS 3.88.

After the official exchange rate was set, the shekel continued to soar against the greenback. The rate reached a level of NIS 3.87 in late trading.

During the last two weeks the dollar has depreciated by 7% against the shekel, roughly in keeping with its its performance against other currencies.

Its depreciation was particulary notable against the currencies of major commodity-exporting countries. The change has been attributed to growing indicators that the global economic crisis has passed its peak and forecasts for increased demand for raw materials.

Foreign banks are selling dollars in exchange for shekels, but the Bank of Israel, which is responsible for the country's economic stability, is broadcasting a message of unease. There were many discussions yesterday morning between the central bank's trading room and the local foreign currency trading rooms, aimed at determining the precise reason for the precipitous fall of the dollar.

But there has been no market failure in the foreign currency arena, and what occurred in downtown Tel Aviv trading rooms was little more than a local market adjustment to economic events worldwide. A 2% fall in the dollar against the shekel seems like a lot, but it was not much different from what the U.S. currency was doing against the euro or the British pound. Since Wednesday, for example, the dollar fell 1.5% against the euro to trade at around $1.21 to the euro. The similarities are apparent from even a glance at the graphs showing the dollar against the shekel, and against the euro.

Why did the dollar fallen by nearly 2%? Because Israelis had a four-day weekend last week, and while the Children of Israel were enjoying their Shavuot cheesecake the dollar was sinking precipitously against most currencies. While Israeli banks were closed a lively shekel-dollar trade continued between banks in New York - for instance, between U.S. offices of Bank Hapoalim and Israel Discount Bank. On Thursday evening the dollar was trading at NIS 3.91. By 5 P.M. yesterday the dollar had sunken no more than NIS 0.02, or slightly more than 0.5%.

There is strong antidollar sentiment in trading rooms worldwide, from New York to London and Tel Aviv, and many are selling off greenbacks. Israel traders reported very brisk sales by foreign and local organizations yesterday. Big trading rooms worldwide were selling dollars against their local currencies.

But if there's a simple explanation for yesterday's dollar drop, then why all the reports about high stress levels at the Bank of Israel? Whatever the reason, any further weakening of the dollar against the shekel will erode the gains of the central bank's dollar purchase program that began 10 months ago.