October 19, 1995 was a landmark in the world of local exchange rates. On the same day, the exchange rate of the dollar closed at NIS 2,991 to the US dollar. Years and a month seem closer than ever.
The big dive of the dollar and other currencies began late last month. At the beginning of the last week of October, it was still trading above the NIS 3.2 line, but this important psychological barrier was breached on Wednesday, October 27, when the dollar closed at NIS 3.19. In just two weeks and a bit the dollar lost 14 cents – almost 5% of its value.
What was the factor that started the fall? Hard to know. The interest rate decision was made on the 7th of the month and the minutes were published two weeks later, on the 21st of the month. And perhaps it was the State Comptroller’s report published in 19 that sharply criticized the central bank’s foreign exchange purchases policy?
One thing is clear, however: the strengthening trend of the shekel picked up on Monday from the low index data, even though they kept the rise in interest rates away. Senior analysts analyze that the current strengthening of the shekel is excessive. But such warnings cannot stop markets in momentum. If no significant event occurs in the coming days, we will see the shekel return soon to 1995, perhaps even this month.