Battered shekel loses more ground
Since the start of 2022, the shekel has depreciated over 11% against the dollar.
The shekel continues to weaken sharply. In afternoon inter-bank trading, the shekel exchange rate is up 0.53% against the dollar at NIS 3.437/$ and up 1.03% against the euro at NIS 3.625/€.
The Bank of Israel set the representative shekel-dollar rate up 1.877% on Friday, at NIS 3.419/$, and the representative shekel-euro rate was set 1.551% higher at NIS 3.588/€.
The continuing sharp falls on global markets are weighing on the Israeli currency as local institutional investors must buy foreign currency to hedge their overseas investments. Last week’s 0.5% rate hike by the US Federal Reserve and more such hikes in the coming months are also weakening the shekel and putting pressure on the Bank of Israel to close the interest rate gap with more hikes.
Since the start of 2022, the shekel has depreciated over 11% against the dollar including 4.4% in April alone. The shekel is now trading at its weakest against the dollar since September 2020.
In recent months the strength of the shekel has insulated Israel against the higher inflation in the US and Europe and moderated price rises in oil and other commodities. But there are now concerns that inflation in Israel will inevitably rise above its current annual rate of 3.5%.
Published by Globes, Israel business news – en.globes.co.il – on May 9, 2022.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.
Shekels Credit: Shutterstock Vladerina32
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