Shekel weaker against dollar ahead of BoI rate call

Shekel Photo: ASAP Creative

Prico: The Bank of Israel was late in stocking up on ammunition and returning the market to a normal situation by raising the shekel interest rate and will now wait.

The shekel is weakening today against the dollar and strengthening against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.31% against the dollar at NIS 3.573/$ and down 0.12% against the euro at 4.008/€.

On Friday, the Bank of Israel set the shekel-dollar representative rate down 0.140% at NIS 3.562/$, and set the shekel-euro rate down 0.323% at 4.013/€.

Prico Risk Management and Investments CEO Yossi Fraiman said, "Better than expected economic data published in the US support the strengthening of the dollar including in Israel, together with a reduction of foreign currency supply from exporters, which is also contributing to the strengthening of the dollar. The dollar rate remains sensitive to events in the energy market, including first and foremost the tensions between the US and Iran and the pressure by the major powers on Iran to halt raising the percentage of its uranium enrichment program. The trade war between the US and China and the ousting of the central bank governor in Turkey also support a strong dollar. On the other hand, the US President is again threatening to improve trade terms by using a low exchange rate, and there is a risk that Europe will draw a US reaction and even the imposition of taxes on goods that will distort terms of trade, and steps that will encourage exports."

Fraiman added, "Against a background of uncertainty regarding the steps that will be taken by the US Federal Reserve regarding cutting the dollar interest rate, at its meeting at the end of the month, and the trend among central banks to encourage economic activity, among other things by cutting the interest rate, we believe that the Bank of Israel was late in stocking up on ammunition and returning the market to a normal situation by raising the shekel interest rate. The Bank of Israel will prefer to wait before raising the interest rate."

Published by Globes, Israel business news - en.globes.co.il - on July 8, 2019

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

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Shekel Photo: ASAP Creative
Shekel Photo: ASAP Creative
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