The Dollar and Euro Are Surging: Is the Shekel Heading for a Surprising Turnaround?
Following the Bank of Israel's interest rate decision that surprised markets, leading currencies have strengthened against the shekel. The chairman of Puria Finance analyzes the situation and provides a forecast for the medium and long term.
Or Puria, chairman of the investment house Puria Finance, conducted a weekly economic review addressing the foreign exchange market and the strengthening of leading currencies against the shekel following the Bank of Israel's interest rate reduction.
"Leading currencies strengthened this week against the shekel against the backdrop of the Bank of Israel's decision to reduce the interest rate—a move that surprised the markets to some extent," Puria stated.
However, in a broader view, the local foreign exchange market continues to be characterized by stagnation, with the dollar hovering around the 3 shekel level and the euro around 3.5 shekels. In the firm's assessment, the interest rate reduction does not fundamentally change the equation, as the market was already anticipating a cut in the near future. In this sense, the Bank of Israel largely anticipated a move that was already priced into the market.
Even after the interest rate decision, the assessment for the medium and long term remains unchanged: basic economic conditions continue to support the strengthening of the shekel. A central factor is the surplus in Israel's trade balance, which continues to generate structural support for the local currency.
