Shekel resumes strong gains

Published date04 November 2021
There was a brief respite from the shekel rally yesterday as the Bank of Israel set the representative shekel-dollar rate up 0.256% from Tuesday, at NIS 3.138/$, and the representative shekel-euro rate was set 0.099% higher at NIS 3.634/€. The shekel is at a 25 year peak against the dollar and the strongest ever against the euro since it was introduced. The shekel has continued to strengthen this week despite reported foreign currency purchases by the Bank of Israel.

The rise in the shekel comes after the US Federal Reserve decided yesterday to keep the interest rate unchanged and reduce its bond buying stimulus program.

Some foreign currency traders say that the shekel resumed its strong gains yesterday after Poland decided to raise its interest rates more aggressively than expected from 0.5% to 1.25% rather than the anticipated 0.75%. The problem is that many foreign investors lump Israel together in the same group of countries as Poland, even though Poland is suffering from inflation and Israel is not. Traders say that foreign funds selling bonds in Israel are betting on an interest rate hike in Israel because countries like Poland are raising interest rates.

Yet it is abundantly clear to all those...

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