The shekel is strengthening against the dollar and against the euro after the Bank of Israel Monetary Committee on Monday, as expected, left the interest rate for June unchanged at an historic low of 0.1% for the 26th consecutive month.
On Tuesday, eve of the Shavuot holiday, the Bank of Israel set the representative rate for the dollar down 0.364% at 3.561/$, a new three year low. The shekel-euro rate was set down 0.951% at 3.968/€. The euro has given up most of its gains against the shekel in recent weeks after the European Central Bank president Mario Draghi yesterday reiterated the ECB's commitment to expansionist policies.
In afternoon inter-bank trading, the shekel-dollar exchange rate was down by a further 0.16% at NIS 3.555/$ and down 0.09% against the euro at NIS 3.965/€.
In recent months, the Bank of Israel has intervened in foreign currency trading to weaken the shekel in order to assist exporters. On every occasion that the rate has slipped below NIS 3.60/$, the Bank of Israel has purchased hundreds of millions of dollars in foreign currency to push the exchange rate higher. However, the shekel has now been below the benchmark NIS 3.60/$ level for the past week, yet the Bank of Israel remains sitting passively on the sidelines.
It remains to be seen whether the Bank of Israel has changed its approach or whether it will again intervene when the banks reopen on Thursday after the Shavuot holiday.
Published by Globes [online], Israel business news - www.globes-online.com - on May 30, 2017
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