Shekel strengthening despite US rate hike

Shekels Photo: Shutterstock
Shekels Photo: Shutterstock

The shekel continues to appreciate against the dollar even though the Federal Reserve has raised the US interest rate by 25 basis points.

The shekel continues strengthening against the dollar and against the euro today despite last night's decision by the US Federal Reserve to raise interest rates. In morning inter-bank trading, the shekel-dollar exchange rate was down 0.25% at NIS 3.5203/$ and down 0.32% against the euro at NIS 3.924/€.

The shekel-dollar exchange rate has fallen to a new 3-year low (since August 2014) despite the US Federal Reserve's decision yesterday to raise the interest rate by 25 basis points to the 1%-1.25% range. The market had priced in a 97% likelihood of a US Federal Reserve rate hike so it is no surprise that the decision has not boosted the dollar.

Since the 2008 financial crisis the Fed has only raised the interest rate four times: in December 2015, December 2016, March 2017 and now June 2017 - each time by 25 basis points. One more rate hike is expected before the end of 2017.

This evening the Central Bureau of Statistics will publish Israel's Consumer Price Index for May with economists expecting that it rose 0.3% over the month.

Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.113% at NIS 3.529/$ from Tuesday's rate and set the shekel-euro rate down 0.146% at 3.954/€.

Published by Globes [online], Israel business news - www.globes-online.com - on June 15, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Shekels Photo: Shutterstock
Shekels Photo: Shutterstock
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