Related News:
Israel Shekel Heads for Biggest Monthly Gain in Year as Yields Lure Buyers
The shekel strengthened against the dollar heading for its biggest monthly gain in a year as the Bank of Israel’s interest rate increase boosted demand for the currency.
The central bank unexpectedly raised its benchmark interest rate on July 26 to 1.75 percent, widening the gap to rates in the U.S. The Federal Reserve at its last decision in June kept rates at a record low, in a range of zero to 0.25 percent.
The shekel strengthened as much as 1 percent to 3.7778 per dollar, the highest intraday level since May 19. The currency traded at 3.7795 at 6:01 p.m. in Tel Aviv. It has gained 1.9 percent this week and has risen 2.8 percent this month.
“Demand for the shekel is rising,” said Arie Tal, chief strategist at Alumot-Sprint Investment House Ltd. in Herzliya, near Tel Aviv. The interest rate increase “widened the gap between local interest rates and the Federal Reserve’s rates, pushing demand for the local currency.”
Government bonds rose, pushing the yield on the benchmark 10-year notes to a record low, as concern the global economic recovery is faltering spurred demand for the relative safety of fixed-income securities.
“As concern for global and local slowdown increases, investors shift their money to solid and safer assets,” Tal said.
U.S. economic growth slackened in some areas over the past two months, dragged down by commercial real estate and the expiration of a tax credit for homebuyers, the Fed said yesterday in its Beige Book business survey.
The 10-year Mimshal Shiklit due January 2020 rose 0.44 shekel to the 106.46 at the 4:30 p.m. close, driving the yield six basis points lower to 4.47 percent, the lowest level since they were sold in November.
To contact the reporter on this story: Ronit Goodman in Tel Aviv at rgoodman9@bloomberg.net
Rate These Stories
Rate this Page