Shekel gains as global recession fears recede

Shekel  / Photo: Shutterstock
Shekel / Photo: Shutterstock

The shekel is strengthening again despite disappointing growth data and lower than expected inflation.

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 3.531/$ and down 0.58% against the euro at 3.912/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.113% at NIS 3.545/$ from Friday's rate, and set the shekel-euro rate up 0.247% at 3.935/€.

Global markets have been buoyant this week as recession fears have receded and bond yields have risen. The shekel is strengthening again despite very disappointing second quarter growth of just 1% in Israel on an annualized basis. And despite July's lower than expected Consumer Price Index (CPI) reading of minus 0.3%, which leaves inflation over the last 12 months at 0.5%, well below the Bank of Israel's annual target range of between 1% and 3%.

Last week, Goldman Sachs issued a report entitled "The Unstoppable Shekel" predicting that the Israeli currency will strengthen to at least NIS 3.45/$ in the next six to 12 months. 

Next week, the Bank of Israel Monetary Committee will announce the interest rate for September. However, Bank of Israel Governor Prof. Amir Yaron has already made it clear that there will be no rate hike in the near future.

Published by Globes, Israel business news - en.globes.co.il - on August 20, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Shekel  / Photo: Shutterstock
Shekel / Photo: Shutterstock
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