The shekel is again weakening today against the dollar and against the euro. In late afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.44% against the dollar at NIS 3.602/$ and up 0.14% against the euro at 4.224/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate 0.25% higher than Tuesday, at NIS 3.5870/$, and the representative shekel-euro rate was set 0.04% higher, at NIS 4.2187/€.
The shekel-dollar exchange rate has passed above the highly significant NIS 3.60/$ threshold after yesterday's meeting in the US in which the Federal Reserve raised the interest rate by a quarter point to the 1.75%-2% range, the highest since 2008. US Federal Reserve chairman Jerome Powell was upbeat about the US economy and said there would be two more rate hikes this year. This will widen the interest gap with the shekel.
The Bank of Israel cut the interest rate to an historic low of 0.1% in March 2015 and it has been anchored there ever since. The Bank of Israel has said it will raise interest rates when inflation moves back towards its annual target of 1%-3%, probably in the final quarter of 2018. After four years of negative or negligible inflation, the rate has risen by 0.4% over the past 12 months, and the Consumer Price Index (CPI) figure for May, which will be announced tomorrow by the Central Bureau of Statistics tomorrow, will indicate if the figure is moving towards 1%.
Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2018
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