The shekel is weakening today against the dollar and against the euro. In early afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.41% against the dollar at NIS 3.643/$ and up 0.52% against the euro at 4.224/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate unchanged at NIS 3.628/$ from Friday's rate and set the shekel-euro rate down 0.036% at 4.202/€.
The shekel is weaker after the Central Bureau of Statistics yesterday reported that the Consumer Price Index (CPI) rose only 0.1% in September. This was the second successive month that Israel's CPI rose by only 1% and inflation over the past 12 months is running at 1.2%, at the lower end of the government's annual inflation target of between 1% and 3%. The low CPI rises of recent months reinforce comments by many analysts such as Goldman Sachs who do not see an interest rate hike this year, as planned by the Bank of Israel.
The interest rate has been anchored at an historic low of 0.1% since March 2015. The appointment of new Bank of Israel Governor Prof. Amir Yaron, who assumed office next month and is relatively unknown, only increases the uncertainty regarding if and when the interest rate will rise.
Published by Globes, Israel business news - en.globes.co.il - on October 16, 2018
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