The shekel is weakening against the dollar and strengthening against the euro today. In early afternoon inter-bank trading, the shekel-dollar exchange rate was up 0.20% from yesterday's representative rate at NIS 3.523/$, and down 0.27% against the euro at 4.1295/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.085% from Friday's rate at NIS 3.516/$ and set the shekel-euro rate down 0.236% at 4.141/€.
The dollar is strengthening on world markets at the expense of the euro due to the crisis that German Chancellor Angel Merkel has encountered in forming a new coalition government.
The shekel remains essentially robust after Israel's stronger than expected third quarter growth data, which showed GDP growing at 4.1% on an annualized basis. In addition, last week Consumer Price Index (CPI) reading for October of 0.3%, slightly higher than expected, has reinforced the belief that inflation is moving closer to the government target range of 1%-3%. Rising inflation and the end of nearly four years of deflation in Israel has encouraged speculators to believe the Bank of Israel will go ahead with planned interest rate hikes in the second half of 2018. Interest rates in Israel have been rooted at a historic low of 0.1% since March 2015 - one of the reasons for the shekel's strength, especially as interest rates have been rising in the US and elsewhere over the past year.
Published by Globes [online], Israel business news - www.globes-online.com - on November 21, 2017
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