Shekel weakens even though rate left unchanged

Shekel Photo: ASAP Creative

While keeping the interest rate at 0.1%, the Bank of Israel announced it would buy up to NIS 15 billion in corporate bonds.

The shekel is weakening today against the dollar and against the euro for the second straight day. In afternoon inter-bank trading the shekel-dollar exchange rate was up 0.53% at NIS 3.460/$ and up 0.15% against the euro at NIS 3.902/€.

Yesterday, the Bank of Israel set the shekel 0.233% higher from Friday at NIS 3.442/$, and the representative shekel-euro rate was set 0.987% higher, at NIS 3.897/€.

Yesterday, the Bank of Israel Monetary Committee announced that it was keeping the interest rate unchanged at 0.1%. However, in response to the Covid-19 crisis and the fall on stock markets, it announced that for the first time ever it would buy corporate bonds, of an amount up to NIS 15 billion. The Bank of Israel also announced that it is renewing the plan to provide the banking system with fixed-rate loans at a 0.1% interest rate, for a term of 3 years, and that it would create an infrastructure for expanding the range of assets that the banks can put up as collateral against credit in the special plan.

The Bank of Israel Research Department also revised its forecast for the Israeli economy, projecting GDP to contract by 6% in 2020. At the end of May the Bank of Israel predicted a 4.5% contraction but the situation has worsened due to the resurgence of Covid-19. In 2021, GDP is projected to increase by 7.5%, slightly higher than the projection in the May forecast.

Published by Globes, Israel business news - en.globes.co.il - on July 7, 2020

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

Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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