Shekel halts slide against dollar

Shekel Photo: ASAP Creative

The Bank of Israel will be under pressure next week to raise the interest rate and close the widening rate gap with the dollar.

The shekel is strengthening today against the dollar and weakening against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate is down 0.35% against the dollar at NIS 3.637/$ and up 0.32% against the euro at 4.215/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.634% at NIS 3.650/$ from Friday's rate before the Simchat Torah holiday and set the shekel-euro rate down 0.334% at 4.202/€.

The dollar is losing ground against the euro on world markets after signs that the Italian government plans to reduce the worrying government deficit has boosted the European currency.

The shekel has gained ground against the dollar but is still trading against the US currency at levels not seen since late August. Last week the US Federal Reserve announced another interest rate hike, raising the interest rate by 25 basis points to 2%-2.25% This was the eighth such hike since 2015.

The next meeting of the Bank of Israel's Monetary Committee to decide on the November interest rate is next Monday. It will be Karnit Flug's last such meeting as Governor and head of the Monetary Committee and she will be under pressure to push the rate from its historic low of 0.1%, where it has been pegged since March 2015, in order to close the widening gap with the Fed's rate. The Fed spoke last week about another rate hike in December, three more in 2019, and another in 2020.

Published by Globes [online], Israel business news - www.globes-online.com - on October 3, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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