Currency Update: Shekel, Baht and Rupee

by on December 11, 2013 6:37 am GMT

Israeli exports sank in the third quarter due to the increasing shekel-dollar exchange rate with Israel scrambling for trading partners during an economic slowdown. Year-to-date, the shekel climbed 9.5 percent over the dollar and did so against three interest rate cuts and $4.7 billion in foreign-exchange purchases. The small economy was hit hard as export shipments fell 16 percent last quarter.

“With the strong shekel and the weaker economies in its traditional trade markets such as Europe and the U.S, Israel is looking to push exports in other regions, especially the growing economies in Asia,” according to Ofer Klein, head of economics and research at Harel Insurance and Financial Services.

The Thai baht gained some momentum as Prime Minister Yingluck Shinawatra dissolved the current parliament as pressure continues to mount from angry protesters. There has been a call for Yingluck and her administration to step down in three days or face further anti-government demonstrations.

The USDTHB fell below key 32 support, and it could continue to gain short-term strength to 31.75. “The baht got some boost as the tension eased in the very short term due to the dissolution of parliament,” said Toru Nishihama, an economist at Dai-ichi Life Research Institute. However, there is growing uncertainty both politically and economically in Thailand.

The rupee dropped on speculation that a US budget deal has been completed, which would include an easing of the automatic spending cuts known as sequestration. The bill was filled earlier tonight and to be voted on Friday. The response, the Indian rupee fell .6 percent after climbing 2.2 percent over the last week.

The potential US budget deal should provide support for the dollar as it eases the political uncertainty in Washington D.C.