The shekel is strengthening against the dollar today and stable against the euro. In afternoon inter-bank trading, the shekel exchange rate is down 0.49% against the dollar at NIS 3.303/$ and is down 0.03% against the euro at NIS 3.317/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate up 1.841% from Friday, at NIS 3.319/$, and the representative shekel-euro rate was set up 2.011% at NIS 3.318/€.
The shekel weakened very sharply yesterday following hawkish comments on Friday by US Federal Reserve Chair Jerome Powell signaling further interest rate hikes and warning of "some pain" ahead in efforts to bring down inflation. The US Federal Reserve has already imposed back-to-back 0.75% hikes over the past two months, and analysts now expect three more hikes before the end of the year totaling about 1%, with rates falling next spring if inflation moderates.
Last week the Bank of Israel announced its own aggressive rate hike of 0.75%, lifting the Israeli rate to 2%, and temporarily narrowing the interest rate gap with the US dollar, which is 2.25% to 2.5%. But that gap is likely to widen further next month when the US Federal Reserve meets and is expected to announce another rate hike, while the Bank of Israel will not impose another hike until the next meeting of its Monetary Committee on October 3, when analysts expect a 0.5% hike to 2.5%.
Published by Globes, Israel business news - en.globes.co.il - on August 30, 2022.
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