Shekel Down, Housing Prices Up

New buildings rise in Ashkelon.  (Lior Mizrahi/Flash90)
New buildings rise in Ashkelon. (Lior Mizrahi/Flash90)

The shekel continued weakening against the dollar on Monday, reaching NIS 3.8251/$ and 4.2389 to the euro, Globes reported.

FXCM Israel research pegged the change to international developments:

“After volatile trading all last week, following the unexpected devaluation of China’s yuan, the shekel-dollar exchange rate opened the new week with the technical risk of breaking downwards.

“The shekel-dollar exchange rate successfully although only just [avoided]  falling below NIS 3.75/$, the bottom of its range in June. Breaking below that level may speed up the fall further. Worldwide, the dollar also fell sharply last week. China’s surprising monetary move has roused serious concerns about the real situation in the world’s second-largest economy. It also caused a chain reaction in the foreign exchange markets that impacted all financial assets, mainly the stock exchanges.”

Meanwhile, Israel’s stubborn housing problem continued to be stubborn. The government assessor reported that home prices increased 5 percent in the second quarter in comparison to the same period last year.

Government Assessor Tal Alderotti said Israelis, unconvinced that prices will come down anytime soon, have flooded back into the market, as seen in a significant uptick in home purchases.

Finance Minister Moshe Kahlon’s proposed reforms aimed at expanding the supply of housing and thereby lowering prices will take time to materially affect the market.

Following the release of the housing prices on Sunday, the Finance Ministry’s “housing war room,” a joint committee Kahlon set up to tackle the housing bureaucracy, announced plans to allow 5,000 new units through the fast-track “occupant’s price” program, which offers subsidies and discounts on apartments for various groups.

The units are slated for construction in Karmiel, Upper Nazareth and Dimona.

Economic growth slowed to an annualized 0.3% in the second quarter, regarded as a serious slowdown in the nation’s already moderate growth rate.