Shekel opens week stronger as markets stabilize

Shekels Photo: Shutterstock Vladerina32

Last week's market falls on Covid Omicron variant concerns have halted and the shekel has resumed its gains.

The shekel is strengthening against the dollar and euro today. In afternoon inter-bank trading, the shekel exchange rate is down 0.78% against the dollar at NIS 3.156/$ and down 0.53% against the euro at NIS 3.563/€.

On Friday, the Bank of Israel set the representative shekel-dollar rate up 0.760% from Thursday, at NIS 3.181/$, and the representative shekel-euro rate was set 1.127% higher at NIS 3.582/€.

Shekel trading has been volatile over the past week. After strengthening against all the world's major currencies on expectations of a rate hike sooner rather than later, the turning point came last Monday when the Bank of Israel Monetary Committee announced it was keeping the interest rate unchanged at its historic low of 0.1%. The unexpectedly low Consumer Price Index rise of 0.1% in October meant that while central banks around the world have had to act to restrain inflation, the Bank of Israel can afford to wait, and expectations of a rate hike receded, thus weakening the shekel.

There were also reports of aggressive foreign currency purchases by the Bank of Israel to intensify the trend. The falls on foreign stock exchanges, which accelerated on Friday on concerns about the new Covid Omicron variant, also weakened the shekel by forcing Israeli institutional investors to buy foreign currency to hedge their overseas holdings. However, the new week has opened with global stock markets stabilizing and the shekel has resumed its gains.

Published by Globes, Israel business news - en.globes.co.il - on November 29, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Shekels Photo: Shutterstock Vladerina32
Shekels Photo: Shutterstock Vladerina32
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