Shekel stronger despite shrinking economy

Shekel Photo: ASAP Creative

The Israeli economy might have contracted 7.1% in the first quarter but the Bank of Israel sees it bouncing back more quickly than previously thought.

The shekel is strengthening today against the dollar and stable against the euro. In afternoon inter-bank trading the shekel-dollar exchange rate was down 0.52% at NIS 3.511/$ and up 0.05% against the euro at NIS 3.848/€.

On the foreign exchange market, the Bank of Israel did not set a new representative rate yesterday because it was a public holiday in the US, UK and other countries in Europe. On Friday, it set the shekel-dollar rate 0.427% higher at NIS 3.529/$, and the representative shekel-euro rate was set 0.445% lower, at NIS 3.846/€.

The shekel is strengthening despite the news yesterday that the Israeli economy contracted at 7.1% in the first quarter of 2020 due to the coronavirus. This not unexpected bleak news was tempered in the afternoon when the Bank of Israel research department announced that it was improving its previous growth forecast for the Israeli economy to contract by only 4.5% in 2020, compared with 5.3% in its April forecast, due to the swifter than expected pace that Israel has come out of lockdown. The Bank of Israel sees Israel's economy growing by 6.8% in 2021, compared with 8.7% in the April forecast.

The Bank of Israel also announced yesterday that it was keeping the interest rate unchanged at 0.1%.

Published by Globes, Israel business news - en.globes.co.il - on May 26, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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