Shekel gains despite dollar's global strength

Shekel Photo: ASAP Creative

The shekel is trading at its strongest for two years against the dollar, even though the dollar is at a four-month high against other major currencies.

The shekel is again strengthening today against the dollar and against the euro. In early afternoon inter-bank trading the shekel was down 0.38% at NIS 3.409/$ and down 0.69% against the euro at NIS 3.721/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate 0.12% lower, at NIS 3.4220/$, and the representative shekel-euro rate was set 0.30% lower, at NIS 3.7464/€.

The shekel is trading at its strongest for two years against the dollar, even though the dollar is at a four-month high against other major currencies as investors, concerned about the damage that the coronavirus outbreak is likely to do to the global economy, have fled to the safe haven greenback. The euro and currencies of emerging economies, in particular, are struggling against the dollar.

But not the shekel. Having gained 7.7% against the dollar in 2019, the Israeli currency has gained a further 1% since the start of 2020 even though the Bank of Israel has bought an estimated $7 billion in foreign currency in the past three months in efforts to weaken the shekel.

Nor does the shekel seem likely to weaken in the near future. The start of the flow of gas from Leviathan and its export to Jordan and Egypt, Israel's entry into the World Government Bond Index (WGBI) from April 2020, which will bring in an estimated $2 billion worth of investment in Israel's bonds, and the continued strength of Israel's economy, all point in the direction of the strengthening of the shekel. Only a possible flare up of geopolitical hostilities seems likely to drag the shekel down.

Published by Globes [online], Israel business news - en.globes.co.il - on February 11, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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