The shekel is strengthening sharply today against the dollar and against the euro. In morning inter-bank trading, the shekel-dollar exchange rate is down 1.11% against the dollar at NIS 3.603/$ and down 0.72% against the euro at 4.222/€, Globes reports.
Yesterday, the Bank of Israel set the shekel-dollar representative rate up 0.524% at NIS 3.643/$ from Tuesday's rate and set the shekel-euro rate up 0.297% at 4.253/€.
The shekel is sharply stronger today after the Bank of Israel announced yesterday that it is keeping the interest rate for September unchanged at its historic low of 0.1%, where it has been rooted since March 2015. The shekel is trading at its strongest against the dollar since mid-June.
Analysts believe that the subsequent enthusiasm for the shekel in forex trading stems from the comments by the Bank of Israel on the stability of the shekel, suggesting that the central bank is likely to minimize purchases of foreign currency in order to weaken the shekel.
The Bank of Israel is expected to raise the interest rate before the end of the year, as inflation has returned to the 1%-3% annual target range, but some have suggested that the rate hike might be delayed until early 2019.