The shekel has been weakening sharply today after yesterday's big gains. In afternoon inter-bank trading, the shekel exchange rate is up 1.12% against the dollar at NIS 3.435/$ and up 1.02% against the euro at NIS 3.632/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 1.307% at NIS 3.397$, and the representative shekel-euro rate was set 0.748% lower at NIS 3.596/€.
Forex markets worldwide are volatile with recessionary concerns, high inflation, and rising interest rates spooking markets. The volatility is particularly felt on Israel's forex market, where institutional investors must hedge their overseas investments, by buying and selling forex accordingly, depending on whether markets are rising or falling.
Next week the Bank of Israel is expected to raise the interest rate by 0.5% to 1.25%. But with the US Federal Reserve expected to raise the rate by 0.75% in July for the second successive month, the interest gap rate between the shekel and dollar is widening, thus weakening the Israeli currency.
Published by Globes, Israel business news - en.globes.co.il - on June 28, 2022.
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