Shekel strengthens further

Shekels Photo: Shutterstock
Shekels Photo: Shutterstock

FXCM Israel: The question is how long the Bank of Israel can stand aside and watch the shekel appreciate.

With the Bank of Israel due to announce its interest rate decision for March today, the shekel has strengthened against the major currencies this morning. The shekel-dollar exchange rate is currently down 0.55% in comparison with Friday's representative rate, at NIS 3.6777/$, and the shekel-euro rate is down 0.69%, at NIS 3.8914/€.

FXCM Israel says in its market review this morning, "The dollar-shekel pair continues to lose altitude and is traded in the region of NIS 3.685, its lowest level since October 2014, in line with the weakening of the US dollar on world markets.

"We are still seeing a sharp correction in the dollar stemming from the sobering up of investors from the hopes that President Donald Trump will shortly act on fiscal expansion and a cut in corporate taxation. The remarks by the Treasury Secretary last week, that more work will be required before such initiatives can be implemented, caused investors to sell the dollar and in fact to wipe out the sharp rise recorded in the value of the dollar after Trump's election victory.

"The postponement of these policy measures has also cooled expectations on the interest rate front, since they would have meant higher inflation, obliging the US Federal Reserve to raise rates.

"Unlike last week, this week's economic diary is packed with important macro numbers, headed by US GDP figures due to be released Tuesday , and Federal Reserve chair Janet Yellen's speech on Friday.

"As for the dollar-shekel, the next support level is at NIS 3.67/$. The question remains how long the Bank of Israel can stand by and watch the appreciation of the shekel against the dollar and the euro."

Published by Globes [online], Israel business news - www.globes-online.com - on February 27, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Shekels Photo: Shutterstock
Shekels Photo: Shutterstock
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