Shekel Strengthened Following Bank’s Announcement
By Aryeh Stern
Analysts anticipate five interest rate cuts by the Bank of Israel in 2024. Following the bank’s recent announcement on Monday that the interest rate will remain steady at 4.75%, the shekel has strengthened.
As the temporary ceasefire continues for the release of more hostages by Hamas, various domestic and external factors are contributing to the strengthening of the Israeli currency. Notably, the global depreciation of the U.S. dollar is a significant factor.
Globes reports that Mizrahi Tefahot Bank chief economist Ronen Menachem notes that recent U.S. data, such as the Purchasing Managers Index (PMI) and home purchase figures, indicating a slowing U.S. economy, has led to a weaker dollar against major world currencies. Menachem adds that this U.S. economic weakness raises expectations of imminent interest rate cuts, further undermining the strength of the U.S. currency. The DXY, evaluating the dollar’s performance, has fallen to 103.2 basis points, its lowest level since August.
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