The Fed sees another rate hike in December and three more next year.
The shekel is weakening today against the dollar and stable against the euro. In morning inter-bank trading, the shekel-dollar exchange rate is up 0.59% against the dollar at NIS 3.6002/$ and down 0.08% against the euro at 4.209/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.82% at NIS 3.579/$ from Tuesday's rate and set the shekel-euro rate up 0.057% at 4.212/€.
The dollar is stronger worldwide including against the shekel, after the US Federal Reserve yesterday announced another interest rate hike. The Fed raised the interest rate by 25 basis points to 2%-2.25% This was the eighth such hike since 2015, during which time the Bank of Israel has kept the interest rate here at its historic low of 0.1%.
The forex market had already priced in yesterday's rate hike but what boosted the dollar was the Fed's comments that it sees another rate hike in December, three more in 2019 and a further rate hike in 2020. The Bank of Israel is expected to raise interest rates either later this year or in early 2019 but either way the interest rate gap between the dollar and the shekel looks set to continue widening.
Published by Globes [online], Israel business news - www.globes-online.com - on September 27, 2018
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