The shekel is again weakening today against the dollar and against the euro. In early afternoon inter-bank trading, the shekel-dollar rate is up 0.36%, at NIS 3.639/$, and the shekel-euro rate is up 0.71%, at NIS 3.901/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.862% from Friday, at NIS 3.626/$, and the representative shekel-euro rate was set 1.877% higher at NIS 3.875/€.
Despite dollar weakness against the world's major currencies the shekel has been depreciating against the US currency this week. The dollar is weakening following the collapse of Silicon Valley Bank (SVB) and some analysts including Goldman Sachs believe that the US Federal Reserve, which had been expected to hike the interest rate 0.25% next week, may now leave the rate unchanged.
Meitav Dash chief economist Alex Zabezhinsky said, "Banking crises mark the limit to the Fed's ability to raise interest rates. The chance that the closure of SVB will lead to a widespread crisis is not high, but the event marks limits to the Fed's ability to continue raising interest rates with high hikes."
Yet after strengthening 2.2% last week against the basket of major currencies, leaving it just 1.4% weaker since the start of the year, the shekel has opened this week weaker, even against the beleaguered US dollar. The shekel's weakness is due to strong falls on Wall Street at the end of last week causing Israeli institutional investors to hedge by selling shekels. The collapse of SVB has also been a blow to Israel's tech sector and the uncertainty over the judicial reform continues.
Published by Globes, Israel business news - en.globes.co.il - on March 14, 2023.
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