Shekel firm despite rate delay concerns

Shekels Photo: Shutterstock
Shekels Photo: Shutterstock

As inflation moves deeper into negative territory, there are fears the Bank of Israel might not raise interest rates until 2019.

After weakening sharply yesterday, the shekel is strengthening slightly in foreign currency trading in Tel Aviv today against the dollar and against the euro. In early afternoon inter-bank trading, the shekel-dollar exchange rate was down 0.14% at NIS 3.623/$ and down 0.09% against the euro at NIS 4.243/€.

Yesterday, the Bank of Israelset the shekel-dollar representative rate up 1.087% at NIS 3.628/$ from Tuesday's rate and set the shekel-euro rate up 0.743% at 4.247/€.

The Israeli currency has stabilized despite concerns that the Bank of Israel might not raise the interest rate as planned in the second half of 2018 because of deepening negative inflation. The July Consumer Price Index (CPI), which against all expectations fell 0.1%, after falling 0.7% in June, is taking inflation further and further away from the government's 1%-3% target range. Just three months ago inflation was running at 0.9% annually, close to the bottom end of the target range. But the recent negative CPIs means that inflation is now a less encouraging -0.7% over the past 12 months.

Published by Globes [online], Israel business news - www.globes-online.com - on August 17, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Shekels Photo: Shutterstock
Shekels Photo: Shutterstock
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