The shekel is weakening today against the dollar and against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate was up 0.96% against the dollar at NIS 3.295/$ and the shekel-euro rate was up 0.88% at NIS 3.989/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate 0.122% lower from Tuesday, at NIS 3.264/$, and the representative shekel-euro rate was set 0.343% lower, at NIS 3.954/€.
Safe haven currencies the dollar and euro are strengthening on global forex markets after the US Federal Reserve issued a gloomy policy statement yesterday. The Fed kept the interest rate (between 0% and 0.25%) and its asset purchasing policy unchanged and said that it sees growth slowing.
A Fed statement said, "The pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic. The path of the economy will depend significantly on the course of the virus, including progress on vaccinations."
Bank Hapoalim senior analyst Nadav Ophir said, "After the euphoria of November and December following the optimistic announcement about the success of the vaccinations and its high efficacy, the market is beginning to understand that the return to routine or close to routine will take time. Risks such as the mutations were not taken into account by investors and the mass vaccinations of people is taking longer than expected after structural logistics difficulties. It is also important to examine what changes and reforms President Biden and his new Secretary of State for the Treasury Janet Yellen will bring such as the $2 trillion plans currently being formed."
After strengthening slightly over the past few days, the shekel has resumed losing ground after the unexpected announcement by the Bank of Israel two weeks ago that it will buy $30 billion in foreign currency in 2021. Since then the shekel has lost nearly 6% against the dollar from NIS 3.1160/$ to NIS 3.289/$. "Yediot Ahronot" reports that the Bank of Israel intervened in forex trading this morning to buy $500 million in foreign currency.
Nevertheless, the shekel is still trading against the dollar at levels not seen before the past few months since 2008.
Published by Globes, Israel business news - en.globes.co.il - on January 28, 2021
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