The shekel continues to weaken today against both the dollar and the euro. In early afternoon inter-bank trading the shekel-dollar exchange rate is up 0.26% against the dollar at NIS 3.477/$ and up 0.44% against the euro at NIS 4.287/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.464% from Friday's exchange rate at NIS 3.468/$ and set the shekel-euro rate up 0.322% at 4.268/€.
The shekel is weakening against the dollar ahead of the US Federal Reserve's expected rate hike tomorrow. This will possibly be the first of three or four rate hikes by the Fed this year as the interest gap between Israel, which has remained rooted at a historic low of 0.1% since March 2015, continues to widen.
Moreover, last week's 0.1% rise in Israel's Consumer Price Index in March has raised concerns that inflation will not move towards the government's target range of 1%-3% and the Bank of Israel will not be able to raise interest rates later this year. At the same time, the continuing fall in housing prices has caused some analysts to suggest the Israeli economy is heading for a slowdown.
Published by Globes [online], Israel business news - www.globes-online.com - on March 20, 2018
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