In morning inter-bank trading, the shekel-dollar rate was down 0.51% against the dollar at NIS 3.229/$ and down 0.26% against the euro at NIS 3.734/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.496% from Tuesday, at NIS 3.245/$, and the representative shekel-euro rate was set 0.008% lower at NIS 3.743/€.
The shekel has ended several days of depreciation as Israel investment institutions sold foreign currency to cover their losses on international stock markets and the dollar reached its strongest against the world’sd major currencies since September 2020.
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Strong shekel insulates Israel from rising inflation
Later today the Bank of Israel will announce its latest interest rate decision. It is expected to remain at its historic low of 0.25% with analysts forecasting a rise from June 2022.
Leumi Capital Markets head of market strategy Kobi Levi said, “The average shekel-dollar exchange rate until the end of 2022 is expected to be in the NIS 3.14-3.24/$ range. This forecast takes into account the stability of the dollar worldwide and the continued purchases of foreign currency by the Bank of Israel. The trend until the end of 2022 is the continued strengthening of the shekel, supported by the basic forces of the current account surplus and the scale of incoming investments in Israel, which are breaking records this year in their size.
“In our estimation, despite the monetary tightening that is beginning worldwide and is expected to continue, in Israel the monetary environment will continue to be expansionist over time. Despite the difference in this policy, no devaluation of the shekel is anticipated, taking into account the inflationary circumstances and inflation forecasts compared with interest rates and the yield expectations, and the gaps in real interest rates between Israel and the world are expected to stay the same. For exporters, the NIS 3.25/$ rate is interesting for enlarging and extending hedging by selling foreign currency and buying shekels in futures deals and strategic options, in readiness for the anticipated lower rates over the coming year.”
Published by Globes, Israel business news – en.globes.co.il – on October 7, 2021
Copyright of Globes Publisher Itonut (1983) Ltd. 2021
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