The shekel is strengthening strongly tonight against the dollar and against the euro. In forward transactions, the shekel exchange rate is down 1.07% against the dollar at 3.545 NIS/$ and 0.51% against the euro at 3.482 NIS/€.
This afternoon, the Bank of Israel set the shekel-dollar representative rate at 1.129% today from Friday at 3.5830 NIS/$, and the shekel-euro representative rate increased by 0.402 % at 3.4998 NIS/€. It is the weakest shekel against the dollar since April 2020, at the start of the economic crisis caused by the Covid pandemic.
The shekel began to strengthen this afternoon after the Bank of Israel announced a second successive rate hike of 0.75%. A rise of 0.5% to 0.75% was expected and Bank Hapoalim chief market strategist Modi Shafrir says other factors dictate the direction of the shekel.
He said: “The foreign exchange market in Israel is mainly influenced in the long term by the substantial current account surplus and the direct investments of foreign organizations in Israel, which support a strong shekel in the long term.
“In the short term, and more specifically since the beginning of the year, the shekel has been mainly influenced by the evolution of global stock markets, with market declines leading to a weakening of the shekel, and vice versa. The interest rate differential do have an influence on the shekel rate but this influence is relatively marginal in our estimate. Furthermore, it is important to point out that the real interest rate differential between the United States and Israel influences the exchange rate more of the shekel dollar than the nominal interest rate spread.”
Published by Globes, Israel business news – en.globes.co.il – October 3, 2022.
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