The shekel has weakened against the US dollar and strengthened against the euro at the start of the week's foreign exchange trading today. The market awaits the Bank of Israel's interest rate decision for September, due to be announced at 16:00 this afternoon. The market consensus is that the central bank will leave its key interest rate unchanged at 0.5%.
The shekel-dollar rate is currently up 0.49%, at NIS 3.5363/$, and the shekel-euro rate is down 0.17%, at NIS 4.6685/€.
"The dollar-shekel rate has risen by about NIS 0.15 since the low in July of NIS 3.40/$, reaching a high of slightly over NIS 3.55/$ last week," FXCM Israel says in its daily market review this morning "The strength of the rise shows the degree of panic that spread in the market in the past few weeks over the state of the Israeli economy. The trigger was disappointing growth figures for the second quarter, but what is weighing on the shekel at present is the continuing campaign in the Gaza Strip, which is causing huge economic damage to Israel. More and more investment banks around the world are publishing negative forecasts about the Israeli economy and the shekel," FXCM continues.
As for the interest rate decision, FXCM says that, after the 0.25% cut last month, the Bank of Israel can be expected to leave the interest rate unchanged. "The rise in the shekel-dollar rate in the past few weeks allows the Bank of Israel to leave the interest rate unchanged this time and to wait to see the effect of last month's cut on the economy," FXCM writes, adding that the support level for the shekel-dollar rate is at NIS 3.5 and the next resistance level is at NIS 3.55/$.
Published by Globes [online], Israel business news - www.globes-online.com - on August 25, 2014
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