Shekel weakens as global markets fall

Shekel Photo: Shutterstock Vladirina 32

Leader Capital Markets chief economist Yonatan Katz expects a rate hike in April, predicting that inflation will climb towards 3% annually.

The shekel is weakening today against the dollar and euro as global stock markets lose ground. In early afternoon inter-bank, the shekel exchange rate is up 0.35% against the dollar at NIS 3.136/$ and up 0.43% against the euro at NIS 3.559/€.

On the foreign exchange market, yesterday the Bank of Israel set the representative shekel-dollar rate up 0.032% from Tuesday, at NIS 3.125/$, and the representative shekel-euro rate was set 0.396% lower at NIS 3.543/€.

The shekel has been depreciating this week as international stock markets fall and Israeli institutional investors are forced to sell shekels and buy foreign currency to hedge their overseas positions.

Another factor that will be effecting the shekel in the coming weeks is the differing interest rates between Israel and other countries, which is likely to weaken the Israeli currency. The US Federal Reserve is expected to announce three rate hikes this year, while the Bank of Israel has said that due to relatively low inflationary expectations, the interest rate will remain at its historic low of 0.1% this year, or at most rise to 0.25%.

But Leader Capital Markets chief economist Yonatan Katz predicts that annual inflation will move up towards 3% in the coming months and in response the Bank of Israel will raise the interest rate at its meeting in April.

Published by Globes, Israel business news - en.globes.co.il - on January 20, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Shekel Photo: Shutterstock Vladirina 32
Shekel Photo: Shutterstock Vladirina 32
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