The shekel is again strengthening today against the dollar and against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate is down 0.71% against the dollar at NIS 3.645/$ and down 0.26% against the euro at 4.186/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.190% at NIS 3.671/$ from Tuesday's rate and set the shekel-euro rate down 0.212% at 4.197/€.
The dollar is weaker on international forex markets after a cautious US Federal Reserve yesterday told investors that it will be patient over future interest rate hikes. The Fed is bowing to pressure from President Donald Trump who several months ago called the planned series of hikes 'crazy.'
These comments open the way for a narrowing of the interest rate gap between the shekel and the dollar. The Bank of Israel, which raised the interest rate in December from its historic low of 0.01% to 0.25% plans a rate hike to 0.5% in the third quarter of 2019, followed by three more hikes in 2020 to 1.25%.
For its part, the Fed made a ninth interest rate hike since 2015 in December raising the US rate to 2.25-2.50%, saying at the time that it had cut the number of planned rate hikes in 2019 to two instead of three. But the tone of the Fed's comments yesterday suggested that those two rate hike might not happen.
Published by Globes, Israel business news - en.globes.co.il - on January 31, 2019
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