The shekel is trading mixed today in interbank trading, flat against the dollar after opening weaker, by the early afternoon it was down 0.06% trading at NIS 3.647/$, and strengthening against the euro by 0.62% and trading at NIS 4.698/€. Worldwide the dollar was strong due to the announcement made yesterday by the US Federal Reserve that it would continue to reduce its monthly bond purchases and that the interest rate would remain at zero.
Yesterday, the US Federal Reserve refuted the concern in the markets and announced that the interest rate will remain at zero for an extended periodafter the end of the bond purchasing program. In so doing, the Fed is indicating to the markets that it does not intend to change its policy sooner than expected - before the second half of 2015.
Federal Reserve Chair Janet Yellen said that although there has been an improvement in the employment market, many are still having difficulty finding work because there are not enough jobs. According to Yellen, raising interest rates is dependent on economic data, not on a pre-defined schedule.
The Fed raised the interest rate outlook and now expects that it will be 1.375% at the end of 2015. The previous forecast, in June, stood at 1.125%. In addition, Fed members believe that interest rates will rise to 3.75% at the end of 2017, while inflation is expected to rise above 2% in the same year.
FXCM Israel said, “The shekel-dollar exchange rate continues to rise and is pushing towards the NIS 3.65/$ threshold. Also around the world, the dollar is continuing to establish its strength, with the dollar nearing its highest since July, 2010. The strengthening of the dollar globally and locally over the past day took place despite the fact that yesterday, following the monthly interest-rate discussions, the Federal Reserve did not change anything, and repeated its standard announcement, according to which it will leave the interest rate at zero for an extended period after the end of the quantitative easing. An exchange rate of NIS 3.67/$ is the rate at which some of the speculators will choose to realize profits, before the decline in domestic trading volume over the Jewish holidays."
Published by Globes [online], Israel business news - www.globes-online.com - on September 18, 2014
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