The shekel has resumed its depreciation, which many analysts attribute to the political tensions in Israel over the planned judicial reform.
The shekel is weakening today against the dollar and against the euro. In afternoon inter-bank trading, the shekel exchange rate is up 0.64% against the dollar at NIS 3.524/$ and up 0.24% against the euro at NIS 3.776/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 1.073% from Monday, at NIS 3.502/$, and the representative shekel-euro rate was set 0.41% lower at NIS 3.767/€.
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Weakening shekel could mean sharper rate hike
The shekel has resumed its depreciation, which many analysts attribute to the political tensions in Israel over the planned judicial reform. This evening the Central Bureau of Statistics will announce the Consumer Price Index (CPI) figure for January, which economists expect to be up about 0.1%, leaving annual inflation down slightly at 5.1%.
Should the CPI figure be higher and should the shekel continue to weaken, thus fueling inflation by increasing the prices of imported commodities and goods, then the Bank of Israel Monetary Committee might be persuaded to hike the interest rate by more than expected at its meeting next Monday.
Most analysts expect the Bank of Israel to raise the rate by 0.25% to 4%. But the hike could be 0.5% if the Israeli currency continues depreciating and today’s inflation figure surprises.
Published by Globes, Israel business news – en.globes.co.il – on February 15, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.
Shekel depreciates credit: Tali Bogdanovsky
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