Shekel stronger ahead of April CPI reading

Shekel Photo: ASAP Creative

With inflation on the rise, the Bank of Israel could raise the interest rate next Monday.

The shekel is strengthening today against the dollar and stable against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate is down 0.27% against the dollar at NIS 3.568/$ and down 0.43% against the euro at 4.001/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.252% today at NIS 3.577/$ from Monday, and set the shekel-euro rate up 0.227% at 4.018/€.

The Central Bureau of Statistics will report the Consumer Price Index reading for April this evening with analysts predicting a 0.5% rise due to increases in fuel prices and clothing and fashion.

With inflation in Israel now well entrenched within the government's target range of 1% to 3%, many are predicting that the Bank of Israel will raise the interest rate at its meeting next Monday. The estimated 5% first quarter growth figure, on an annualized basis, (boosted by a sharp rise in exports), which the Central Bureau of Statistics is expected to announce tomorrow, further enhances the likelihood of a rate hike.

However, global uncertainty (Brexit and the US-China trade talks) and the appreciation of the shekel, which has strengthened by 1.7% against the dollar over the past two weeks, could persuade the Bank of Israel to hold off on its planned interest rate hike. Israel's interest rate is 0.25%, after it was raised in November 2018 from its historic low of 0.1%.

Published by Globes, Israel business news - en.globes.co.il - on May 15, 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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