The shekel is firm after the Bank of Israel Monetary Committee yesterday raised the interest rate by 0.75% to 2% - the biggest rate hike since June 2002. In afternoon inter-bank trading, the shekel exchange rate is down 0.05% against the dollar at NIS 3.280/$ and is down 0.93% against the euro at NIS 3.253/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.799% from Friday, at NIS 3.282/$, and the representative shekel-euro rate was set down 0.018% at NIS 3.284/€.
In its interest rate announcement yesterday, the Bank of Israel wrote, "Since the previous monetary policy decision (July 4), the shekel strengthened by 6.9% against the US dollar, by 10.2% against the euro, and by 8.8% in terms of the nominal effective exchange rate."
The rapid appreciation of the shekel ran counter to the decision to hike interest rates aggressively, as any increase could further strengthen the shekel, much to the disappointment of exporters, already struggling with the strength of the Israeli currency.
The shekel, meanwhile, has not reacted, despite the big declines of the last few days on Wall Street, with a sharp depreciation and has been maintaining its firm position. This is most likely due to the reduction of institutional investors' exposure to US stock markets over the last two months.
After the Israeli currency weakened against the dollar in early July, the shekel strengthened to about NIS 3.28/$. Against the euro, the shekel strengthened from NIS 3.67/€ in early July to NIS 3.26/€ today, a dramatic gain of 11.1% in a month and a half.
Published by Globes, Israel business news - en.globes.co.il - on August 23, 2022.
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