The shekel is strengthening today against the dollar and against the euro. In afternoon inter-bank trading, the shekel exchange rate is down 0.93% against the dollar at NIS 3,256 / $ and down 0.82% against the euro at NIS 3,582 / €.
Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.581% from Monday, at NIS 3,287 / $, and the representative shekel-euro rate was set 0.846% higher at NIS 3,611 / €.
Israel’s February CPI reading higher than expected
The shekel is gaining today after yesterday’s higher than expected Consumer Price Index reading for February of 0.7%. Inflation is now running at 3.5% annually, which is above the 3% upper limit of the annual inflation target range of the Bank of Israel. Rising inflation brings Israel closer to an interest rate hike, with the Bank of Israel saying last month that it would start gradually increasing the interest rate.
Inflation, which is already 7.9% annually in the US, is expected to rise further over the next few months, as the full impact of the Russia-Ukraine war is felt, and the consequent rises in oil and commodity prices.
At the moment, all eyes are on the US Federal Reserve, which is expected to announce this evening at 8pm Israel time that interest rates are rising by 0.25%. Most focus will be on what Fed chair Jerome Powell’s plans are for future hikes.
The sharp rises on Wall Street yesterday also support the strengthening of the shekel with Israeli institutional investors buying shekels to hedge their positions on the US stock market.
Published by Globes, Israel business news – en.globes.co.il – on March 16, 2022.
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