Dollar Weakens Slightly Against Shekel Amid Global Strength
Translated & summarized from Calcalist by baba
The Israeli shekel slightly weakened against the U.S. dollar, trading above 3.10 shekels, despite a global dollar strengthening. This occurred after Wall Street's sharp decline and a surge in oil prices, leading investors to safe-haven U.S. Treasury bonds. The Bank of Israel recently kept its interest rate unchanged at 3.25%, with inflation, energy prices, and exchange rate fluctuations remaining key concerns.
The story in 5 lines · by baba
- The Israeli shekel weakened 0.1% against the dollar, trading above 3.10 shekels.
- Global markets saw the dollar strengthen against a basket of major currencies.
- U.S. Treasury yields dropped sharply as investors sought safe-haven assets.
- Oil prices continued to rise, increasing concerns about inflation.
- The Bank of Israel recently maintained its interest rate at 3.25%.
The Israeli shekel saw a slight depreciation against the U.S. dollar on Thursday, even as the dollar strengthened globally. Locally, the dollar fell 0.1% to trade just above 3.10 shekels, while the euro declined 0.2% to trade slightly below 3.48 shekels.
Globally, the euro weakened 0.2% against the dollar, trading near $1.12, and the British pound fell 0.2% to just under $1.14. The dollar remained stable against the Japanese yen at 156.8 yen. The dollar index, measuring its strength against major currencies, rose 0.2% to 101.8 points.
These currency movements followed sharp declines on Wall Street the previous day, driven by renewed concerns over artificial intelligence industry investments and company financing needs. The Nasdaq Composite plunged 2.6%, its worst day since June, and the S&P 500 lost 1.2%. The stock market downturn, coupled with rising oil prices, prompted investors to seek refuge in U.S. Treasury bonds, considered a safe-haven asset during uncertain times. The yield on 10-year Treasury bonds dropped over 20 basis points to 4.945%, falling below 5% for the first time since September 23, marking the steepest daily yield decline since March 10, 2023.
Oil prices continued to climb, having surged 4% the previous day to a five-month high, fueled by escalating conflicts between Saudi Arabia and the Houthis and fears of energy supply disruptions. This price increase heightens concerns about persistent inflationary pressures, which could influence central bank interest rate decisions.
In Israel, the shekel's trading occurred after the Bank of Israel's decision on Wednesday to maintain its interest rate at 3.25%. While annual inflation stood at 1.6% in September, high energy prices, the shekel's recent weakening, and both local and global uncertainty remain key focus points. Since the previous interest rate decision, the shekel has weakened by 3.1% against the dollar, though it strengthened by 0.3% against the euro.
Yossi Menashe, Co-founder and Co-CEO of Altshuler Shaham Financial Services, commented that the Bank of Israel's decision reflects a balance between moderate inflation and risks from rising energy costs and exchange rate developments. He noted that further oil price increases could boost inflation expectations, pressure bond markets, and delay monetary easing in the U.S. and Europe. Menashe added that demand for the dollar as a safe haven and increased local risk might support its value against the shekel, but its direction will also depend on global dollar trends and developments within Israel.
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