The shekel is weakening today against the dollar and stable against the euro. In late morning inter-bank trading, the shekel-dollar exchange rate is up 0.52% against the dollar at NIS 3.597/$ and up 0.07% against the euro at 4.220/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.168% from Monday's exchange rate at NIS 3.578/$ and set the shekel-euro rate up 0.166% at 4.217/€.
The shekel-dollar exchange rate is approaching the highly significant NIS 3.60/$ threshold ahead of tonight's meeting in the US in which the Federal Reserve is expected to raise the interest rate by a quarter point to the 1.75%-2% range, the highest since 2008. World markets have already priced in a rate hike. This will widen the interest gap with the shekel.
The Bank of Israel cut the interest rate to an historic low of 0.1% in March 2015 and it has been anchored there ever since. The Bank of Israel has said it will raise interest rates when inflation moves back towards its annual target of 1%-3%, probably in the final quarter of 2018. After four years of negative or negligible inflation, the rate has risen by 0.4% over the past 12 months, and the Consumer Price Index (CPI) figure for May, which will be announced by the Central Bureau of Statistics on Friday, will indicate if the figure is moving towards 1%.
Published by Globes [online], Israel business news - www.globes-online.com - on June 13, 2018
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