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Shekel gains on dollar weakness

  • October 19, 2021

The shekel is strengthening against the dollar and weakening against the euro in afternoon inter-bank trading today. The shekel-dollar rate is down 0.55% against the dollar at NIS 3.211/$ and up 0.16% against the euro at NIS 3.747/€.

Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.311% from Friday, at NIS 3.229/$, and the representative shekel-euro rate was set 0.177% higher at NIS 3.741/€.

The shekel is appreciating strongly against the dollar today. The US currency has sunk to a three week low against the world’s major currencies as safe haven investors move away due to rising international market confidence that Chinese company Evergrande’s debt crisis has been contained. The dollar is also weaker following negative US economic data on factory production and market expectations that the US will normalize monetary policy faster than previously anticipated.

Foreign currency purchases by the Bank of Israel to weaken the shekel remain low. The Bank of Israel only purchased $1 billion in foreign currency last month and $3.14 billion in the third quarter of 2021, after buying $25 billion in foreign currency in the first half of the year. At the current rate, the Bank of Israel may actually only buy the $30 billion in foreign currency it originally spoke of for 2021 back in January, although it has said it would be prepared to exceed that amount if necessary.

The shekel has been trading stably within a very narrow NIS 3.20-3.25$ trading range since July, despite the reduced Bank of Israel foreign currency purchases. Nevertheless, analysts like Bank Leumi’s Kobi Levi predict that the shekel-dollar rate will move below NIS 3.20/$ in 2022 due to the inherent strength of the Israel economy when it is likely to trade in the NIS 3.15-3.25/$ range.

Published by Globes, Israel business news – en.globes.co.il – on October 19, 2021.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2021.


Article source: https://en.globes.co.il/en/article-1001387807#utm_source=RSS

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