The shekel has strengthened against the dollar, but weakened against the euro in inter-bank trading today, after the Bank of Israel decided on Monday to keep the interest rate for April unchanged. The shekel-dollar exchange rate has fallen 0.47%, compared with yesterday's representative rate, to NIS 3.473/$, but the shekel-euro exchange rate has risen 0.10% to NIS 4.806/€.
In international markets, the dollar is traded at $1.383/€ against the euro.
Asian markets are mixed today, and futures contracts on Wall Street are stable, after leading indices fell by up to 1.2% on Monday. The markets fell on concerns about a slowdown in China and Russia, and after the G8 countries expelledRussia from the organization, reverting to the G7, and cancelled the upcoming summit in Sochi, in response to Russia's annexation of Crimea.
Yesterday, the Bank of Israel decided to keep the interest rate for April unchanged at 0.75%, in line with market expectations. However, the Bank of Israel cut its forecasts for 2014. It now forecasts 3.1% growth (down from its previous forecast of 3.2%), and 3% growth in 2015. Excluding estimated contributions from natural gas production at Tamar, it forecasts that GDP growth will rise from 2.5% in 2013 to 2.8% in 2014 and 3% in 2015.
FXCM Israel says this morning, "The shekel-dollar exchange rate opened the trading week with high volatility, and the dollar is traded within an unusual daily range of 350 points (NIS 3.46-3.495/$), because of uncertainty in the local market over the Bank of Israel's next policy steps after it decided to keep the interest rate unchanged yesterday. Despite the Bank of Israel's fears about a slowdown in the Israeli economy and continued strengthen of the shekel against the dollar, in the current climate, it could not allow itself to be seen cutting the interest rate and taking the risk of further fuelling the rise in home prices when the government has announced far-reaching steps to lower home prices."
Published by Globes [online], Israel business news - www.globes-online.com - on March 25, 2014
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