Shekel weakens as US Fed keeps rate unchanged

Shekel  / Photo: Shutterstock

The dollar is weaker against most currencies but the shekel is bucking the trend due to the Bank of Israel's foreign currency purchases.

The shekel is again weakening today against the dollar and against the euro after the US Federal Reserve kept the dollar interest rate unchanged yesterday, as expected. In afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.11% against the dollar at NIS 3.481/$ and up 0.57% against the euro at 3.875/€.

Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.346% today, at NIS 3.477/$, and the representative shekel-euro rate was set up 0.393% at NIS 3.853/€.

The US Federal Reserve kept the dollar interest rate unchanged and Fed chair Jerome Powell said there would be no hike until inflation rises. The dollar lost ground against most of the world's major currencies.

But the shekel is still being influenced by the Bank of Israel's ongoing intervention on the forex market where it has halted the strengthening of the shekel and assisted exporters, by buying large amounts of foreign currency.

This was a policy that new Governor Prof. Amir Yaron was reluctant to pursue when he took office last December and until the past few months, he was reluctant to sanction forex intervention and preferred to let market forces prevail. But in October the Bank of Israel bought $314 million in foreign currency and in November purchases rose to $1.268 billion. These purchases have continued into December, including yesterday, and it now seems that Yaron has fully embraced the concept of foreign exchange market intervention, as an instrument for weakening the Israeli currency.

Published by Globes, Israel business news - - on December 12, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Shekel  / Photo: Shutterstock
Shekel / Photo: Shutterstock
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