Shekel slips, consolidates between NIS 3.70-3.80/$

Shekel Photo: Shutterstock
Shekel Photo: Shutterstock

Analysts are divided on whether the Bank of Israel will raise the interest rate next week.

The shekel is again weakening today against the dollar and against the euro. In early afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.69% against the dollar at NIS 3.742/$ and up 0.20% against the euro at 4.258/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.216% at NIS 3.716/$ compared with Monday's rate and set the shekel-euro rate up 0.307% at 4.247/€.

The shekel is at its weakest against the dollar since February 2017 and is consolidating well above NIS 3.70/$, after trading in the NIS 3.60-NIS3.70/$ range for most of the past six months. Ironically, the shekel's depreciation comes in the wake of the Bank of Israel's announcement that it has halted purchases of foreign currency to offset the revenues from the sale of Israel's offshore natural gas.

On Monday, the Bank of Israel Monetary Committee meets to decide on December's interest rate. Some analysts, such as Leader Capital Markets macroeconomist Yonatan Katz, expect that the committee will raise the interest rate from its historic low of 0.1%, where it has been rooted since March 2015. This because Israel's annual inflation rate is finally stabilizing within the government's annual target range of 1%-3%. However, others feel that the Monetary Committee under Acting Governor Nadine Baudot-Trajtenberg will be loath to make such a significant change, before the new Governor Prof. Amir Yaron assumes office at the end of December.

Ofer Klein, head of Harel's economic department does not see the Bank of Israel raising the interest rate because of the disappointing GDP growth figures published earlier this week.

Meanwhile, the interest gap between Israel and the US is widening, with the US Fed expected to lift the interest rate again next month.

On world markets today the dollar is strengthening with investor seeking a safe haven currency as stock markets fall on concerns about slower world growth and trade tensions.

Published by Globes, Israel business news - en.globes.co.il - on November 21, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Shekel Photo: Shutterstock
Shekel Photo: Shutterstock
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