The shekel is strengthening this evening against the dollar and against the euro. In early evening futures trading the shekel was down 0.37% against the dollar at NIS 3.424/$ and down 0.04% against the euro at NIS 3.719/€ after the Bank of Israel Monetary Committee announced that it was leaving the interest rate unchanged at 0.25%.
Immediately prior to the announcement this afternoon, the Bank of Israel set the representative shekel-dollar rate up 0.380% from Friday at NIS 3.437/$, and the representative shekel-euro rate was set up 0.489% at NIS 3.721/€. The shekel had been weakening due to expectations by many that the Bank of Israel would cut the rate from 0.25% to 0.1%.
The Bank of Israel noted that, "Since the previous interest rate decision, the shekel has strengthened by approximately 3% in terms of the nominal effective exchange rate, a development that continues to weigh on the return of inflation to the target range."
On its decision the Bank of Israel said, "The Monetary Committee's assessment is that in view of the inflation environment in Israel, the monetary policies of major central banks, developments in the global economy and the risks to the domestic economy, and the development of the exchange rate, it will be necessary to leave the interest rate at its current level for a prolonged period or to reduce it in order to support a process at the end of which inflation will stabilize around the midpoint of the target range, and so that the economy will continue to grow strongly. Furthermore, the Committee is taking additional steps to make monetary policy more accommodative. The Bank of Israel continues to monitor developments in inflation, the real economy, fiscal policy, the financial markets, and the global economy, and will act to attain the monetary policy targets in accordance with such developments."
Published by Globes, Israel business news - en.globes.co.il - on February 24, 2020
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