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Shekel Gains on Monetary Policy Outlook, Retreats

August 24, 2012 at 4:56 by Vladimir Vyun

A coin on some ILS billsThe Israeli new shekel weakened a little today against the US dollar. Earlier, the currency gained on hopes that central banks would spur economic growth, while the central bank of Israel itself would keep its monetary policy unchanged. The currency rose versus the euro.

The global economy is stalling and investors look for central banks to spur growth. Such hopes keep the market mood closer to optimism, but it is questionable whether such support would hold for long. Anyway, traders believe that some actions to revive growth would be taken and that belief rules the Forex market for now.

At the same time, analysts think that the Bank of Israel would refrain from cutting its interest rates. Consumer inflation, driven by rising food prices, does not warrant lower interest rate. Such outlook should keep the shekel from falling too much.

USD/ILS rose from 4.0137 to 4.0153 as of 4:56 GMT today, while its daily low was at 4.0060. EUR/ILS fell from 5.0429 to 5.0415 and its intraday minimum was at 5.0310.

If you have any questions, comments, or opinions regarding the Israeli New Shekel, feel free to post them using the commentary form below.

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