The shekel has opened mixed against the major currencies this morning. The shekel-dollar exchange rate is currently up 0.04% in comparison with Friday's representative rate, at NIS 3.9235/$, and the shekel-euro rate is down 0.7%, at NIS 4.3976/€.
After the storm on world stock markets subsided at the end of last week, the main Asian markets have started to fall again, with the Shanghai Stock exchange down more than 3%. Futures contracts on Wall Street indicate a negative opening.
Despite the feeling on the markets last week that the interest rate rise in the US would be postponed because of recent shocks, Federal Reserve vice chair Stanley Fischer broadcast business as usual at the weekend, saying that there was no need to wait for inflation to reach 2% before raising interest rates. This Friday, the markets will receive another indication of the US economy's health, with the release of the August employment report. Tomorrow, China's second quarter GDP figures will be published. They are expected to show a continued weakening in the world's second largest economy.
Smart Capital CEO Izik Noy says in a market review, "The high volatility on the stock markets removed the sharp movements on the foreign exchange front from the headlines. In the past two weeks, the shekel-dollar exchange rate has risen about 3.5%. It's important to stress that the movement in the pair came from the direction of the shekel, which was weakened by talk of a possible negative Bank of Israel interest rate.
"Despite the public discussion, we do not see a situation in which the Bank of Israel will use the negative interest rate tool, and Dr. Flug's very remarks about such an extraordinary eventuality brought about the required depreciation of the shekel without any action having to be taken. The central bank governor's recent actions in fact indicate correct thinking and the right use both of the media and of the monetary tools at her disposal. The Bank of Israel will continue to intervene in trading by buying dollars, and will let the interest rate rise in the US to do its work for it."
Published by Globes [online], Israel business news - www.globes-online.com - on August 31, 2015
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