The shekel is continuing its months-long trend, strengthening against the dollar and the euro.
The shekel-dollar exchange rate on Tuesday went down 0.84% against the dollar and is now traded at NIS 3.471/$ and down 0.82% against the euro, currently trading at 3.869/€.
The strengthening shekel is excellent news for Israelis who shop online, or who are currently traveling abroad. The evaluating currency has equally significant ramifications for manufacturers in Israel who wish to export their goods, and workers of foreign companies operating in Israel.
The shekel has now dipped below the psychological barrier of NIS 3.50 / $1 against the dollar for the first time since March 2018, more than a year ago. It has also fallen below NIS 3.90/€ for the first time since April 2017.
The currency with the biggest value-drop against the shekel is the British Sterling, trading at NIS 4.261/£, its lowest rate since July 1993. This is likely due to investors concern over the prospects of a no-deal Brexit under the newly appointed UK Prime Minister Boris Johnson.
The shekel’s strength compared to the dollar may soon change, as the US Federal Reserve plans to the cut interest rate under pressure from President Donald Trump. The new policy will likely strengthen the dollar, as lower interest rates tend to be unattractive for foreign investment and therefore decrease the currency’s relative value.
One of the expected outcomes of the policy, from an Israeli perspective, is the stabilization of the shekel, compared the dollar. This is a goal bank of Israel has been after for some time now but has not been very successful so far.
Amir Yaron, Governer of the Bank of Israel, stated that “in light of the latest development, I suspect that we will not raise the interest rate for some time. Furthermore – if necessary, we have other instruments at our disposal.”