Israeli Shekel dropped to 10-month low against US$

The shekel was the world's strongest currency against the dollar in the 12 months preceding this summer, when a weak dollar bought as little as 3.22 shekels
 
The dollar continued to drive other currencies lower last week and the shekel-dollar rate in late Wednesday trading was quoted at over NIS3.88, the highest it has been since December 26, 2007.
 
Analysts explained that the surge in the dollar is mainly due to expectations that the collapse in commodity prices will allow European countries to slash interest rates in order to ward off a recession.
 
At the end of last week the representative shekel-dollar exchange rate was set 2.267% higher, at NIS 3.834/$, while the representative shekel-euro exchange rate was set 2.224% lower at NIS 4.9426/€.
 
US investment house Merrill Lynch has picked the shekel to be the safest asset in emerging markets. "While Iceland, South Africa and Ukraine are already facing a currency crisis, in Israel the shekel is the safest asset inemerging markets in our view". Anne Benoit, an analyst at Merrill Lynch, said in a report published last Wednesday.
 
"The shekel presents some defensive characteristics, which has served the currency relatively well at a time of several global risk conditions”.
 
The shekel was the world's strongest currency against the dollar in the 12 months preceding this summer, when a weak dollar bought as little as 3.22 shekels. At its low, experts were cautiously advising that the shekel-dollar rate may recover to 3.70 by the end of December. However, in the past three months, it has lost virtually all of the rise in its value.