The shekel is strengthening sharply against the dollar and is also stronger against the euro today after the Central Bureau of Statistics announced that Israel's economy grew at an annualized rate of 6.2% in the fourth quarter of 2016. In afternoon inter-bank trading, the shekel-dollar exchange rate was down 0.91% from yesterday's representative rate at NIS 3.732/$, a 30 month low, and down 0.1% against the euro at NIS 3.9504/€, a 15-year low. The Bank of Israel is expected to intervene and weaken the shekel by purchasing foreign currency.
Last night the Central Bureau of Statistics announced that the CPI fell 0.2% in January and that home prices had fallen 1.2% in November and December.
Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.027% compared with Tuesday's rate at NIS 3.747/$, and the representative shekel-euro rate was set down 0.691% at NIS 3.954/€.
FXCM Israel said in its daily review this morning, "The shekel-dollar exchange rate is losing ground and again testing the NIS 3.73/$ level. The two currencies are being traded at their April-May 2016 low-point even though the dollar index worldwide has risen to a high-point for the past month following high inflation figures published in the US with January prices rising 0.6% - the highest monthly rise in the US since February 2013. This has increased expectations for another US interest rate hike. This follows Janet Yellen's remarks to a Congress committee that the Fed will consider an interest rate rise at its upcoming meeting and the market sees this as an indication of a rise in March or May, earlier than has been expected in recent weeks. Three US rate hikes are expected in 2017. On the other hand, there is little demand for the dollar against the shekel despite the low exchange rate but we could have reached the bottom, especially if the dollar continues to strengthen on world markets.
Published by Globes [online], Israel business news - www.globes-online.com - on February 16, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017
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