Dollar Stable Around 3.11 Shekels After Wall Street Volatility
Translated & summarized from Ice by baba
The Israeli shekel remained stable against the dollar and euro on Friday, trading at 3.110 and 3.488 respectively, following Wall Street's sharp declines. Global markets saw the dollar strengthen amid rising geopolitical and financial risks, while oil prices surged. The Bank of Israel recently kept its interest rate unchanged at 3.25%, despite ongoing inflationary pressures and currency fluctuations.
The story in 5 lines · by baba
- The dollar held steady at 3.110 shekels and the euro at 3.488 shekels in local currency trading.
- Wall Street experienced sharp declines, with the Nasdaq dropping 2.6% and the S&P 500 losing 1.2%.
- Oil prices surged 4% to a five-month high amid escalating Saudi-Houthi tensions.
- U.S. Treasury yields fell sharply as investors sought safe-haven assets.
- The Bank of Israel maintained its interest rate at 3.25% on Wednesday.
Trading in the local currency market on Friday saw minimal fluctuations, with the dollar holding steady at 3.110 shekels and the euro at 3.488 shekels against the Israeli currency. The British pound experienced a slight gain of 0.1%, trading at 4.165 shekels.
Internationally, the dollar maintained its strength, with the dollar index (DXY) rising 0.1% to 101.50 points. The US currency strengthened by 0.1% against the Japanese yen, reaching 156.95 yen, while the euro and pound traded near $1.1215 and $1.3392 respectively.
This currency market activity follows sharp declines on Wall Street the previous day. The Nasdaq index plummeted by 2.6%, its worst performance since June, and the S&P 500 lost 1.2%. These stock market drops, coupled with a 4% surge in oil prices to a five-month high due to escalating tensions between Saudi Arabia and the Houthis, prompted investors to seek refuge in U.S. Treasury bonds. Consequently, the ten-year bond yield fell over 20 basis points to 4.945%, dropping below 5% for the first time since September 23, marking the steepest daily yield decrease since March 2023.
In Israel, the shekel's trading occurred after the Bank of Israel's decision on Wednesday to maintain the interest rate at 3.25%. Despite a September annual inflation rate of 1.6% within the stability target, rising energy prices and local and global uncertainty cast a shadow. Since the previous interest rate decision, the shekel has weakened by 3.1% against the dollar, though it saw a modest 0.3% gain against the euro.
The dollar has recently re-established itself as a primary safe-haven currency, benefiting from increased geopolitical and financial risks. In the lead-up to the interest rate decision, the shekel faced noticeable depreciation pressure, as security tensions ahead of elections and concerns over escalation in various arenas prompted institutional investors and foreign players to increase their exposure to dollar-denominated assets, accelerating the dollar's rise against the shekel.
