Shekel soars after strong growth data

The shekel is strengthening sharply today against the dollar and against the euro after the Central Bureau of Statistics announced higher than expected growth figures for 2021. In afternoon inter-bank trading, the shekel exchange rate is down 1.31% against the dollar at NIS 3.183/$ and down 0.93% against the euro at NIS 3.624/€.

On the TASE, the Tel Aviv 35 Index is currently 1.14% higher at 1999.87 points and the Tel Aviv 125 Index is 1.22% higher at 2090.95 points.

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Israel’s economy grew 8.1% in 2021

Inflation moves above Bank of Israel’s target range

Yesterday, the Bank of Israel set the representative shekel-dollar rate down 1.134% from Monday, at NIS 3.225/$, and the representative shekel-euro rate was set 0.770% lower at NIS 3.658/€.

Just two days ago, the shekel was trading at NIS 3.262/$, its weakest against the dollar since July 2021, as investors fled to safe haven currencies like the dollar. But the easing of tensions in the Russia-Ukraine confrontation weakened the dollar worldwide. Now the unexpectedly strong fourth quarter growth figures of 16.6%, which meant Israel’s economy grew 8.1% last year, has seen the shekel surge.

The Consumer Price Index (CPI) figure of 0.2% for January, which was published yesterday was slightly above the analysts’ expectations. This brings annual inflation in Israel to 3.1% – above the Bank of Israel’s annual target range of 1%-3%, for the first time since 2011. However, Bank of Israel Deputy Governor Andrew Abir told “Globes” last week that even if inflation rose above the target range, the Bank of Israel would not be in a hurry to raise interest rates from its historic low of 0.1%.

Published by Globes, Israel business news – en.globes.co.il – on February 16, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.