Shekel loses ground after rate left unchanged

Shekel Photo: ASAP Creative

Goldman Sachs does not see the Bank of Israel raising the interest rate this year.

The shekel is weakening today against the dollar and against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate is up 0.56% against the dollar at NIS 3.640/$ and up 0.63% against the euro at 4.180/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.358% at NIS 3.620/$ from Friday's rate and set the shekel-euro rate down 0.660% at 4.154/€.

The shekel has lost ground after the Bank of Israel Monetary Committee yesterday decided to keep the interest rate unchanged at 0.1%. It was the last meeting under Governor Karnit Flug whose five year term ends next month. Her successor has not yet been named.

Even though the interest rate between the shekel and the dollar, is widening, with the Fed hiking the rate this month, and expected to do so again in December, many analysts do not see an Israeli rate rise this year. Goldman Sachs sees the Bank of Israel raising the interest rate in the first quarter of 2019 and not before because inflation in Israel in 2018 is expected to be only 0.9%, below the government's annual target range of 1%-3%.

The Bank of Israel has kept the interest rate at an historic low of 0.1% since March 2015.

Published by Globes [online], Israel business news - en.globes.co.il - on October 9, 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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