Union Bank sees shekel weakening against dollar

Shekels Photo: Shutterstock

The bank's economists expect the interest rate difference between the US and Israel to weaken the shekel and move it away from current three year lows.

In their weekly foreign currency survey, Union Bank of Israel (TASE: UNON) economists predict that the shekel and other important currencies worldwide will weaken against the dollar in the medium and long term. The main reasons are interest rate differences between the US and the rest of the world, with the interest rate in the US slated to rise moderately and cautiously, and the relative strength of the US economy, compared with the rest of the world.

Union Bank adds, "The shekel is affected by three principal factors: oil and gas transactions, various exits, and strong growth. These three factors have recently strengthened the shekel against the dollar, but in the long term, this gap is likely to narrow, due to both the anticipated interest rate raises in the US in comparison with Israel and the difference in inflation rates and the targets for interest rate increases set by the Bank of Israel and the US Federal Reserve Board."

However, for the time being the shekel continues to strengthen. In futures trading the shekel has strengthened 0.41% against the dollar to NIS 3.512/$, a new three year low, and 0.15% against the euro to NIS 3.933/€.

Union Bank also commented on the stock market, writing, "The recommended share exposure in a representative portfolio is 18%, or 36% in a speculative portfolio. In the composition of shares, we recommend an equal division between Israel and overseas. With respect to geographic exposure overseas, our preference is for the US, with an emphasis on sectors likely to continue benefiting from the relative strength of the US economy. At the same time, we recommend profit taking and diversion of 2% from the US to Europe, so that the recommended geographic distribution for overseas shares is reducing the proportion in the US from 60% to 58%, increasing the proportion in Europe from 20% to 22%, 9% in Japan, and 11% in Asia, excluding Japan."

Published by Globes [online], Israel Business News - www.globes-online.com - on June 18, 2017

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

5 Comments
View comments in rows
Update by email about comments talkback
POST
Comments
Your name
Please insert your name
Content
Hyperlink in a new window Hyperlink Right Left underline italic bold Bulleted List Ordered List Face1 Face2 Face3 Face4 Face5 Face6
Your comment

Thanks
You comment was recieved and soon will be published.
In posting comments, I agree to abide by the Terms of Use
Globes encourages lively and frank debate, but posts that the editors consider merely abusive or otherwise inappropriate will be removed. Report inappropriate content
Thank you for posting your comment, which will be reviewed for publication.
Loading Comments...load
Load more comments
Shekels Photo: Shutterstock
Shekels Photo: Shutterstock
Twitter Facebook Linkedin RSS Newsletters גלובס MAD Conference 2017