The shekel is again strengthening sharply today against the dollar and against the euro. In early afternoon inter-bank trading the shekel-dollar exchange rate was down 1.09% at NIS 3.565/$ and down 0.75% against the euro at NIS 3.85/€.
On the foreign exchange market, last Tuesday before the Passover holiday, the Bank of Israel set the representative shekel-dollar rate 0.634% lower than Monday's rate, at NIS 3.6040/$, and the representative shekel-euro rate was set 0.028% lower, at NIS 3.900/€.
The shekel is extending its gains today despite the Bank of Israel Monetary Committee's decision last week to cut the interest rate to 0.1% from 0.25% - the first rate cut since 2015. The lowering of the interest rate was expected and the foreign exchange market had clearly already priced in the cut.
Tomorrow the Central Bureau of Statistics will announce the Consumer Price Index rise for March. It remains unclear what influence the complete shutting down of entire areas of the economy - not food and household goods retail, culture and entertainment, tourism and more - will have on the March figure, with analysts expecting a rise of about 0.3%.
The main influence on forex trading remains the stock markets. When the international markets plunge then Israeli banks and institutional investors need to buy large amounts of foreign currency to cover overseas positions. When the markets rise sharply as they have yesterday and today then there is the opposite effect.
Last week the Bank of Israel announced that it had injected $7.5 billion in short-term dollar credit into the financial system to help institutional investors and banks meet their overseas positions on falling world markets in the wake of the coronavirus crisis.
Published by Globes, Israel business news - www.globes-online.com - on April 13, 2020
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