The shekel has strengthened more than 4% against the dollar this month from 3.569/$ in early November.
The shekel is strengthening sharply today against the dollar and is firm against the euro. In late morning inter-bank trading, the shekel exchange rate is down 0.92% against the dollar at NIS 3.421/$ and down 0.10% against the euro at NIS 3.562/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 0.633% from Tuesday, at NIS 3.453/$, and the representative shekel-euro rate was set 0.048% lower at NIS 3.565/€.
Bank of Israel hikes rate by 0.5%
The dollar is weakening against all major currencies on world forex markets after the minutes of the most recent US Federal Reserve meeting showed support for moderating interest rate hikes. The shekel has strengthened more than 4% against the dollar this month from 3.569/$ in early November.
Earlier this week the Bank of Israel hiked the interest rate by 0.5% to 3.25%. But Bank Hapoalim chief strategist Modi Shafrir feels that this is not the reason for the Israeli currency’s appreciation.
He said, “There will be no noticeable effect (from the rate hike) because the dollar-shekel rate is currently mainly affected by developments on the world’s stock markets, and in the longer term by the basic forces that support a strong shekel. The interest rate differentials do not have a material effect on the shekel-dollar rate today, especially when the interest rate hikes in Israel are quite synchronized with the interest rate hikes in the US.”
Indeed the Wall Street indices have been rising this week, forcing Israeli institutional investors to buy shekels to hedge their overseas positions.
Published by Globes, Israel business news – en.globes.co.il – on November 24, 2022.
Shekels credit: Shutterstock Vladerina32