The shekel has strengthened nearly 4% against the US dollar in less than three weeks.
The shekel has been strengthening sharply today. In afternoon inter-bank trading, the shekel exchange rate is down 1.24% against the dollar at NIS 3.313/$ and down 0.89% against the euro at NIS 3.571/€.
On Friday, the Bank of Israel set the representative shekel-dollar rate down 0.238%, at NIS 3.355/$, and the representative shekel-euro rate was set 0.050% lower at NIS 3.603/€.
The shekel has strengthened nearly 4% against the dollar in less than three weeks, after trading at its weakest for 20 months against the US currency in the first half of May.
The main factors driving the strengthening of the shekel over the past week has been the decision of the Bank of Israel to raise the interest rate by 0.4% to 0.75% last week, at the highest end of the expected range, and thus closing the interest rate gap with the dollar.
Another factor strengthening the shekel has been the sharp rise on global stock exchanges. This has compelled Israeli institutional investors to hedge their overseas positions by buying shekels.
The sharp rise in gasoline prices in Israel tomorrow night by NIS 0.66 per liter has intensified inflation concerns. This morning Bank Hapoalim raised its annual inflation forecast to 3.5% – still below the 4% inflation Israel has experienced over the past 12 months and well below inflation levels in the US and Western Europe.
Published by Globes, Israel business news – en.globes.co.il – on May 30, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.
Shekels Credit: Shutterstock Vladerina32
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