The shekel is weakening sharply today against the dollar and against the euro. In afternoon inter-bank trading, the shekel-dollar rate is 0.86% higher at NIS 3.653/$, and the shekel-euro rate is 1.12% lower at NIS 3.947/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.36% from Friday, at NIS 3.622/$, and the representative shekel-euro rate was set 0.456% higher at NIS 3.95/€.
Prico Risk Management, Finance and Investment CEO Yossi Fraiman told "Globes" that the shekel-dollar exchange rate will remain volatile in the near future and that the Israeli currency could strengthen. He said, "The activity of exporters selling foreign currency to cover salaries and tax payments contributes to foreign currency surpluses and appreciation of the shekel. The markets are waiting for the interest rate decisions in Israel and the US and it is currently estimated that due to the latest macroeconomic data, primarily demand in the job market, no interest rate cut is expected in the first quarter."
"Such a move contributes to the strengthening of the dollar against the main currencies, but on the other hand, in Israel, there is active selling activity by exporters at a time when the demand for foreign currency for trips abroad and for local use is low, which creates excess supply and leads to the strengthening of the shekel. In our estimation, the roller coaster is expected to continue when the dollar is expected to move in a wide exchange rate range and the potential for appreciation will be limited. The need to raise significant funding sources and the expected turn to foreign markets to raise sources as a supplement to raising funds in the local market is expected to challenge the Ministry of Finance following the cut in the credit rating."
Fraiman also says that Israel's catastrophic growth figures for the fourth quarter, which saw the economy shrink by almost 20% in the fourth quarter of 2023 could make it easier for the Bank of Israel Monetary Committee to cut the interest rate again at its meeting next week.
Published by Globes, Israel business news - en.globes.co.il - on February 20, 2024.
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