Shekel weakens after November CPI reading

Shekel  / Photo: Shutterstock
Shekel / Photo: Shutterstock

After depreciating 1% last week against the dollar, the Israeli currency continues to lose ground.

The shekel is weakening today against the dollar and against the euro after the Central Bureau of Statistics last night reported the November Consumer Price Index (CPI) reading. In afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.66% against the dollar at NIS 3.499/$ and up 0.29% against the euro at 3.897/€.

The Bank of Israel set the representative shekel-dollar rate 0.144% lower on Friday, at NIS 3.476/$, and the representative shekel-euro rate was set 0.289% lower, at NIS 3.886/€.

Yesterday the Central Bureau of Statistics reported that the Consumer Price Index (CPI) fell 0.4% in November, slightly more than expected. Inflation is running at 0.3% over the past 12 month, well below the Bank of Israel's annual target range of between 1% and 3%.

The Bank of Israel is unlikely to alter the interest rate in the near future and Governor Prof. Amir Yaron has reluctantly adopted the policy of his predecessor Dr. Karnit Flug of buying foreign currency to weaken the shekel and assist exporters. The Bank of Israel bought nearly $1.6 billion in foreign currency in October and November and has made significant purchases so far this month.

"Last week the shekel depreciated by 1%," said Leader Capital Markets macroeconomist Yonatan Katz. "The Bank of Israel currently prefers using the forex market intervention tool to cutting the interest rate."

Published by Globes, Israel business news - en.globes.co.il - on December 16, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Shekel  / Photo: Shutterstock
Shekel / Photo: Shutterstock
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