Shekel at weakest for two months

Shekels Photo: Shutterstock Vladerina32

The Israeli currency continues to depreciate amid steep falls on stock markets worldwide.

The shekel is continuing to weaken today against the dollar and euro as global stock markets sustain their steep falls. In late afternoon inter-bank trading, the shekel exchange rate is up 0.36% against the dollar at NIS 3.178/$ and up 0.17% against the euro at NIS 3.589/€.

Earlier this afternoon, the Bank of Israel set the representative shekel-dollar rate up 0.860% from Friday, at NIS 3.167/$, and the representative shekel-euro rate was set 0.623% higher at NIS 3.583/€.

The shekel has been depreciating over the past week as international stock markets fall and Israeli institutional investors are forced to sell shekels and buy foreign currency to hedge their overseas positions. The Israeli currency is trading at levels against the dollar not seen since late November.

The shekel is also weaker ahead of the US Federal Reserve meeting later this week. The Fed is expected to announce three rate hikes this year, while the Bank of Israel has said that due to relatively low inflationary expectations, the interest rate will remain at its historic low of 0.1% this year, or at most rise to 0.25%. In contrast with inflation running at 7% annually in the US, the Fed has no choice but to significantly raise rates, widening the rate gap between the dollar and the shekel and weakening the Israeli currency.

Published by Globes, Israel business news - en.globes.co.il - on January 24, 2022.

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

Shekels Photo: Shutterstock Vladerina32
Shekels Photo: Shutterstock Vladerina32
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