The shekel has resumed strengthening against the dollar and against the euro ahead of today's interest rate decision by the US Federal Reserve. In morning inter-bank trading, the shekel-dollar exchange rate was down 0.39% at NIS 3.519/$ and down 0.24% against the euro at NIS 3.95/€.
The shekel-dollar exchange rate has fallen to a new 3-year low (since August 2014) despite the US Federal Reserve's expected decision today to raise the interest rate by 25 basis points to the 1%-1.25% range. The market has priced in a 97% likelihood of a US Federal Reserve rate hike. Since the 2008 financial crisis the Fed has only raised the interest rate three times - in December 2015, December 2016 and March 2017 - each time by 25 basis points. With US unemployment at a 16-year low of 4.3% and the US economy still growing, it would be a major surprise if the Fed does not announce a rate hike.
The US economy aside, the shekel remains very strong with the Bank of Israel showing no inclination to intervene in foreign currency trading. In April and May, the Bank of Israel purchased $2 billion in foreign currency to weaken the shekel and help exporters.
Yesterday, the Bank of Israel set the shekel-dollar representative rate unchanged at NIS 3.533/$ from Monday's rate and set the shekel-euro rate down 0.156% at 3.959/€.
Published by Globes [online], Israel business news - www.globes-online.com - on June 14, 2017
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