The shekel has strengthened substantially against the major currencies at the start of the week on the foreign exchange market. The shekel-dollar rate is currently 0.57% lower than Friday's representative rate, at NIS 3.9075/$, while the shekel-euro rate is 0.61% lower, at NIS 4.797/€.
"The economic debate in Israel has become superficial, extreme, and sometimes violent," said Governor of the Bank of Israel Karnit Flug yesterday at the Jerusalem conference of the Institute of Certified Public Accountants in Israel. Flug estimated that the fiscal deficit for 2014 would be 3% of GDP, lower than the 3.4% deficit planned in the 2015 proposed budget, now abandoned because of the dissolution of the Knesset.
UBS analyst Michele Crema estimates that that the Israeli economy will strengthen next year, and that the shekel-dollar exchange rate will stabilize at NIS 3.9-4/$, leading the Bank of Israel to raise its interest rate in the second half of the year.
In its market survey this morning, FXCM Israel says that the mood on world markets has turned around since the Federal Reserve Board expressed confidence in the US economy last week, and signaled that it was examining the right timing for an interest rate rise. "For the time being, the shekel-dollar rate has responded moderately to the global strengthening of the dollar, and is in the NIS 3.90-3.93/$ range, still below the trend line that has delimited every rise since the rate was around NIS 3.4/$. In the Christmas week, trading volumes and volatility can be expected to be low, and so it is hard to believe that we shall see significant movement or breakthroughs until the start of 2015."
Published by Globes [online], Israel business news - www.globes-online.com - on December 22, 2014
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