Shekel hits 3-month strongest against dollar

Shekels credit: Shutterstock Vladerina32
Shekels credit: Shutterstock Vladerina32

The shekel has fallen below NIS 3.40/$ for the first time since the start of September.

The shekel is strengthening today against the dollar and against the euro. The Bank of Israel set the representative shekel-dollar rate down 0.785% today at NIS 3.414/$, and the representative shekel-euro rate was set 0.087% higher at NIS 3.567/€.

In late afternoon inter-bank trading, after the rate was set, the shekel exchange rate is down 0.55% against the dollar at NIS 3.395/$ and down 0.13% against the euro at NIS 3.563/€.

The shekel is trading at its strongest against the dollar since the start of September, falling below NIS 3.40/$ for the first time in three months. This is due to the weakening of the dollar on world markets, while yesterday's strong rises on Wall Street further boosted the shekel as Israeli institutional investors sold dollars to hedge their overseas positions. In addition the shekel traditionally strengthens at the start of the month as tech companies and exporters convert foreign currency to shekel to pay salaries and other expenses.

Last week, the Bank of Israel Monetary Committee, headed by Governor Prof. Amir Yaron, hiked the interest rate by 0.5% to 3.25%. This was the sixth rate hike made by the Bank of Israel since April, when it raised the rate from its historical low of 0.1% to 0.35%. Analysts expect two more rate hikes of 0.25% in January and February.

But the interest rate has not been the major factor dictating the direction of the shekel over the past few days but rather the fall in overseas stock markets, forcing Israeli institutional investors to buy shekels to hedge their overseas positions.

Published by Globes, Israel business news - en.globes.co.il - on December 1, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Shekels credit: Shutterstock Vladerina32
Shekels credit: Shutterstock Vladerina32
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