The shekel is weakening today against the dollar and against the euro, as the markets reopen after the Jewish holidays. In afternoon inter-bank trading the shekel-dollar exchange rate is up 0.20% at NIS 3.540/$ and up 0.27% against the euro at NIS 3.943/€.
On Friday, the Bank of Israel set the shekel-dollar representative rate down 0.338% at NIS 3.533/$, and set the shekel-euro rate up 0.145% at 3.933/€.
The shekel is weakening today after the Central Bureau of Statistics cut its estimate for second quarter 2019 growth from an already poor 1% on an annualized basis to just 0.6%. This follows recent cuts in Israel's growth forecast for 2019 and 2020 by both the Bank of Israel and the International Monetary Fund (IMF).
The political uncertainty is doing nothing to strengthen the mood on the shekel with Prime Minister Benjamin Netanyahu unable to form a coalition and Blue & White leader Benny Gantz being given a mandate to form a government but looking unlikely to succeed.
Last week, the Central Bureau of Statistics announced that the Consumer Price Index fell 0.2% in September. This means that inflation in Israel over the past 12 months has fallen to just 0.3%, moving further away from the Bank of Israel's annual target range of between 1% and 3%. This increases the likelihood of an interest rate cut sooner rather than later. Earlier this month, Bank of Israel Governor Prof. Amir Yaron said that the Monetary Committee decision to keep the rate unchanged at 0.25% was not unanimous and that when the minutes were published it would be seen that there are good reasons for already cutting the rate.
Published by Globes, Israel business news - en.globes.co.il - on October 22, 2019
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