The shekel continues to weaken against the US dollar, following the release of the Consumer Price Index reading for February yesterday, which showed a surprise 0.7% drop. The shekel-dollar rate has risen by 0.38% this morning, in comparison with Friday's representative rate, to NIS 4.0302/$. The shekel-euro rate is down by the same margin, at NIS 4.2459/€.
US investment bank Goldman Sachs predicts that the dollar-euro rate will reach parity within the next six months, and will fall to $0.80/€ by the end of 2017, a year after the European Central Bank is expected to end its quantitative easing program.
The Federal Open Market Committee of the US Federal Reserve is due to announce its interest rate decision on Wednesday. Following better than expected US job figures for February, expectations have risen of an interest rate rise in the US in September, and the Federal Reserve's announcement this week will be closely scrutinized for hints in this direction.
Tamir Fishman Mutual Funds CEO David Katash says that the drop in the CPI in February justifies the Bank of Israel's decision to cut its interest rate to 0.1%. "It looks as though the Bank of Israel will have to take further action to encourage growth in the economy, and that the interest rate tool by itself is not enough," Katash said.
Published by Globes [online], Israel business news - www.globes-online.com - on March 16, 2015
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