The shekel is weakening sharply today against the US dollar and is firm against the euro. In afternoon inter-bank trading the shekel-US dollar exchange rate is up 1.40% at NIS 3.678/$, and the shekel-euro rate is up 0.16%, at NIS 3.782/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 0.248% from Monday, at NIS 3.627/$, and the representative shekel-euro rate was set 0.214% lower at NIS 3.775/€.
The dollar is strengthening worldwide after reports in the US that President elect Donald Trump will declare a national economic emergency to provide legal justification for his new tariff program.
Ultra Finance chief economist Ran Sinai said earlier today, "The shekel is currently showing volatility against the major currencies, including the US dollar, the euro and the pound sterling. The shekel has strengthened by about 5% since October, when it traded above NIS 3.81/$. However, in recent days, some weakening has been evident, apparently following the change in policy by the Fed, which decided to slow the pace of interest rate increases. Against the euro and the pound sterling, the shekel continues to strengthen markedly. The euro exchange rate is currently at 3.783 and the pound sterling exchange rate at 4.558, an impressive increase of about 11% since September, when the rates were 4.21 and 5.04 shekels against the euro and the pound sterling, respectively."
He added, "A number of key factors influence these trends. On Monday, the Bank of Israel left the interest rate at 4.5%. The Governor, Prof. Amir Yaron, explained that the move was intended to cut and curb inflation."
"Looking ahead, the continuation of the restrictive monetary policy in Europe and the UK may lead to a weakening of the shekel against the major currencies. However, additional monetary steps by the Bank of Israel and a possible improvement in the political situation in Israel may strengthen the shekel's position and positively affect its trends in the markets."
Published by Globes, Israel business news - en.globes.co.il - on January 8, 2025.
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