Rate cut spurs further shekel depreciation

shekel  picture: bloomberg
shekel picture: bloomberg

FXCM: After the politicians caused the housing market to collapse, the Bank of Israel can make exporters happy.

The sharp depreciation of the shekel over the past few weeks was given fresh impetus by the surprise 0.25% cut by the Bank of Israel in the September interest rate. In interbank trading this evening the shekel-dollar exchange rate was up 0.56% in comparison with this afternoon's representative rate, at NIS 3.563/$, and the shekel-euro rate was up 0.58%, at NIS 4.704/€. The shekel-dollar exchange rate is at its highest point in more than a year.

This afternoon, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.543/$, up 0.682% on Friday's rate, and set the shekel-euro representative exchange rate at NIS 4.677/€, up 0.002%.

FXCM Israel research department head Moshe Shalom said, "There is nothing like riding a wave. Just when the shekel was swiftly weakening against the US dollar the Bank of Israel decided to give the weakening of the Israeli currency a further push. Real estate bubble? Not really a problem now that the appointed politicians (the Finance and Housing Ministers) have done everything to slow the pace of home purchases. In fact they've caused the market to collapse. This leaves the Bank of Israel free to push the interest rate close to 0 and make exporters even happier."

Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

shekel  picture: bloomberg
shekel picture: bloomberg
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