The shekel is strengthening today against the dollar and is stable against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate is down 0.09% against the dollar at NIS 3.618/$ and down 0.03% against the euro at 4.071/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.275% at NIS 3.621/$ from Friday and set the shekel-euro rate up 0.098% at 4.072/€.
Even though the Bank of Israel only purchased $2 million in foreign currency during February, the shekel has strengthened by 2% over the past few months.
The Bank of Israel Monetary Committee members noted during their interest rate deliberations on February 25th that the effective nominal rate of the shekel, which had strengthened by 2% since the previous interest rate decision and that this stymying inflation and leaving it beneath the target range of 1%-3% annually.
The prevailing opinion was that the slowdown in economic activity in Israel is a passing phenomenon and growth will rise despite the slowdown in the world economy. It was decided to leave the rate unchanged at 0.25%.
During the meeting members of the Monetary Committee spoke about weak export figures and in particular exports of goods. The Committee agreed that the global economy continues to lose momentum and mentioned that the slowdown is likely to result in postponement of planned interest rate hikes in the US and a reduction in quantitative easing in the euro bloc.
On the housing market, the Monetary Committee noted that the fall in apartment prices had moderated and that activities in the sector continued to demonstrate weakness and that investment in residential construction remained low. There was concern that if the slowdown in the construction sector continues , it could harm the rate of growth in the near future.
Published by Globes, Israel business news - en.globes.co.il - on March 12, 2019
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