Shekel weakens as new Covid variant spooks markets

Shekel Photo: ASAP Creative

The Israeli currency is weakening as global markets go into a tailspin over the discovery of a new Covid variant in southern Africa.

The shekel is again weakening against the dollar and euro as the emergence of the new Covid variant in southern Africa spooks global markets. In afternoon futures trading, the shekel exchange rate is up 0.15% against the dollar at NIS 3.189/$ and up 0.36% against the euro at NIS 3.595/€.

Earlier today, the Bank of Israel set the representative shekel-dollar rate up 0.760% from Thursday, at NIS 3.181/$, and the representative shekel-euro rate was set 1.127% higher at NIS 3.582/€.

The shekel is weakening as global markets go into a tailspin over the discovery of a new Covid variant in southern Africa, which is believed to be more infectious than the Delta variant and more resistant to existing vaccines. Several cases have already been discovered in Israel from vaccinated travelers returning from Malawi in southeast Africa. Yesterday Israel declared a list of countries in southern Africa (Malawi was not on the list) as 'red' countries, banning travel to them and requiring Israelis returning from them to go into isolation hotels.

The entire world is on high alert with new calls for travel restrictions. Stock markets are falling in Europe with the FTSE Index in London down 2.77%. Commodity prices are also falling with a barrel of Brent crude oil down 5.74% in price. Wall Street, which was closed yesterday for Thanksgiving, is expected to fall sharply, when it reopens this afternoon. Bearish markets tend to weaken the shekel as Israeli institutional investors are forced to buy foreign currency to hedge their overseas positions.

Bank of Israel Governor Prof. Amir Yaron was interviewed by "Bloomberg" yesterday and said that he sees no reason for another large program of major intervention in foreign currency trading, due to the rapid recovery of Israel's economy. "The appreciation of the shekel reflects a strong economy," he said. He added that the Bank of Israel would continue to intervene on the foreign currency market, if required by circumstances and economic activity.

Published by Globes, Israel business news - en.globes.co.il - on November 26, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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