The shekel is weakening today against the US dollar and the euro amid heightened security concerns over Iran and lack of progress in hostage talks with Hamas. In afternoon inter-bank trading, the shekel-dollar rate is 1.22% higher at NIS 3.774/$ and the shekel-euro rate is 1.420% higher, at NIS 4.125/$.
On Friday, the Bank of Israel set the representative shekel-dollar rate down 1.319% at NIS 3.742/$, and the representative shekel-euro rate was set 1.311% higher at NIS 4.089/€.
Prico Risk Management, Finance and Investments CEO Yossi Fraiman said, "Last week activity by the business sector infused foreign currency and led to excess supply and the appreciation of the shekel. But the fear of an imminent escalation has brought the depreciation of the shekel back from lower levels to above the level of NIS 3.75/$. But the sharp and rapid reduction in the supply of airlines available to Israeli vacationers contributes to the decrease in demand for foreign currency for vacations."
He added, "There is no change in our assessment in which a broad escalation will support increased volatility and strong demand for the dollar, something that may boost its rate to above the NIS 3.8/$ level, already in the short term.
Due to the expansion of the deficit and the weakness in the economic indices, there is growing concern about the downgrading of Israel's credit rating, a move that would increase the cost of credit financing raised by the government in foreign markets, which would take a larger share of the state budget."
Published by Globes, Israel business news - en.globes.co.il - on August 12, 2024.
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