The shekel is strengthening today against the dollar and against the euro. In early afternoon inter-bank trading, the shekel-dollar exchange rate is down 0.39% against the dollar at NIS 3.596/$ and down 0.59% against the euro at 4.0399/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.055% today at NIS 3.610/$ from Tuesday, and set the shekel-euro rate down 0.015% at 4.064/€.
The shekel remains strong today against the dollar even though the US currency has rallied somewhat against the euro despite clear hints from US Federal Reserve Chairman Jerome Powell that interest rates are likely to be cut to offset any harm to US growth due to the trade wars with China and Mexico. The shekel has pushed the dollar below the important psychological NIS 3.60/$ threshold.
The anticipated Fed rate cut makes it look much less likely that the Bank of Israel will raise Israeli interest above the current rate of 0.25%, although Israel's central bank has previously spoken about a rate hile in 2019.
At yesterday's "Globes" Capital Market Conference, Leumi Capital Markets interest rate strategist David Reznik said, "The Bank of Israel may have made a mistake, because earlier, it could have raised the interest rate slightly, but it did not do so, and it will now find it difficult to raise it because of the Fed's policy."