Shekel resumes gains despite falling inflation

Shekel Photo: ASAP Creative

The lower than expected June CPI rise makes an interest rate cut next month much more unlikely.

The shekel is strengthening today against the dollar and stable against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate is down 0.16% against the dollar at NIS 3.535/$ and down 0.02% against the euro at 3.973/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.028% at NIS 3.541/$ from Tuesday, and set the shekel-euro rate down 0.060% at 4.009/€.

The shekel continues to trade at its strongest levels for 15 months against the dollar and below the key NIS 4/€. Last week the Bank of Israel reiterated its forecast of an interest rate hike during the current quarter of 2019. However, the June Consumer Price Index reading of minus 0.6%, a much bigger fall than expected, means inflation over the past 12 months has fallen below the 1%-3% target range, and makes the chances of a rate hike this quarter much less likely.

On world markets the dollar is weaker on low US Treasury yields, disappointing housing data and growing tensions in the US-China trade talks.

Published by Globes, Israel business news - en.globes.co.il - on July 18, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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