Shekel advances against jittery dollar

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative

Prico CEO Yossi Fraiman: The US Fed is expected to slow the pace of interest rate hikes.

The shekel is again strengthening today against the dollar and against the euro. In morning inter-bank trading, the shekel-dollar exchange rate is down 0.31% against the dollar at NIS 3.752/$ and down 0.21% against the euro at 4.275/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.397% at NIS 3.763/$ compared with Monday's rate and set the shekel-euro rate up 0.007% at 4.285/€.

At the start of the week, the shekel was trading at levels not seen against the dollar since January 2017. But the dollar has been losing ground on international forex markets, spooked by uncertainty at the outcome of the current US Federal Reserve meeting, which began yesterday. Last month, the Fed had spoken about another rate hike now and three more rate hikes in 2019. But after President Donald Trump called the Fed's interest rate policy 'crazy,' it is unclear how the Fed will react. 69% of analysts expect a rate hike announcement this evening, while the fed is also expected to comment on its rate policy for 2019.

In Israel, Prico Risk Management and Investments CEO Yossi Fraiman said, "End of year financial activities led by financial institutions and public companies resulted in high foreign currency demand and the depreciation of the shekel towards NIS 3.78/$. Depreciation of the shekel towards the NIS 3.775/$ level brings about trade from algorithms that sell large amounts of foreign currency. In our estimates, although the potential for the depreciation of the shekel has not been realized in the short term, in the medium to long term the shekel will strengthen, which may challenge the Bank of Israel if the dollar strengthens against the world's major currencies."

He added, "The Federal Reserve is expected to raise dollar interest today by 0.25%. This is a decision that will widen the interest rate gap between the shekel and the dollar. In our opinion, looking to 2019, the pace of interest rate rises in the US is expected to be lower than previously forecast and instead of three or four rate hikes, there may be only two."

Published by Globes, Israel business news - en.globes.co.il - on December 19, 2018

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

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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