The shekel is strengthening today against the dollar and stable against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate is down 0.40% against the dollar at NIS 3.678/$ and up 0.04% against the euro at 4.183/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.054% at NIS 3.693/$ from Tuesday's rate and set the shekel-euro rate down 0.774% at 4.181/€.
The shekel is again strengthening today against the dollar despite last night's announcement by the Central Bureau of Statistics that the Consumer Price Index (CPI) for July was unchanged. Even though analysts' had predicted a 0.2% rise, inflation remains at 1.4% over the past 12 months, well within the government annual target range of between 1% and 3%. This should allow the Bank of Israel to raise the interest rate from its historic low of 0.1% where it has been anchored since March 2015, and close the interest rate gap with the dollar.
Further good news for the shekel is the ongoing talks between Israel and Egypt, which is acting as a go-between with Israel and Hamas and is reportedly close to an agreement to end hostilities on the Gaza border.
On the world stage, with international trade disputes escalating, the dollar is strengthening, particularly against currencies in emerging economies. However, the underlying strength of the Israeli economy is enabling the shekel to consolidate its position below the NIS 3.70/$ threshold.
Published by Globes [online], Israel business news - www.globes-online.com - on August 16, 2018
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