Shekel 6% stronger in 2021 and still gaining

• Author: Guy Ben Simon
• Published date: 07 November 2021
• Publication title: Globes (Rishon LeZion, Israel)

On the foreign exchange market, the Bank of Israel set the representative shekel-dollar rate down 0.22% on Friday, at NIS 3.118/$, and the representative shekel-euro rate was set 0.20% lower at NIS 3.603/€. In futures trading, the shekel-dollar rate is down a further 0.26% at 3.1098/$ and the euro is down 0.15% at NIS 3.5971/€.

Meitav DS chief economist Alex Zabezhinsky wrote in his weekly survey, "The main reason for the swift appreciation of the shekel has been expectations for a rise in the interest rate in Israel. According to the Interest Rate Swap (IRS), the interest rate inherent in Israel in another three to five years has moved higher than the interest rate in the US. We estimate that the Bank of Israel will continue to intervene in the foreign currency trading market even though it has reached the threshold of its purchases.

On the assumption that the current exchange rate will remain at the same level in the coming six months, its influence on the inflation rate is expected to be about 0.3% spread between a response to the travel abroad area in the November index (about 0.1%) and a delayed response to several other...