The shekel is strengthening today against the dollar and weakening against the euro. In early afternoon inter-bank trading, the shekel-dollar exchange rate is down 0.37% against the dollar at NIS 3.703/$ and up 0.27% against the euro at 4.228/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.595% at NIS 3.717/$ on Friday and set the shekel-euro rate up 0.924% at 4.217/€.
The shekel is strengthening against the dollar despite the uncertain political future of the Netanyahu government. It is also stronger despite yesterday's disappointing third quarter GDP growth figure of 2.3%, below the economists' forecast of 2.5%-3%. In addition, the second quarter growth estimate was revised down from 1.8% to 1.2% and the first quarter growth estimate was revised down from 5.1% to 4.6%. The Bank of Israel forecast for GDP growth in 2018 is 3.7%, although in light of these latest figures that forecast is likely to be lowered.
Following the October CPI figure of 0.3% announced by the Central Bureau of Statistics last week, inflation is running at 1.2% in the past 12 months. As the inflation rate is consolidating within the government's annual target range of 1%-3%, Leader Capital Markets macroeconomist Yonatan Katz expects that the Bank of Israel's Monetary Committee will raise the interest rate when it meets next Monday from its historic low of 0.1%, where it has been rooted since March 2015.
Published by Globes, Israel business news - en.globes.co.il - on November 19, 2018
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