Dollar Stable Around NIS 3.11 After Wall Street Volatility
Translated & summarized from Ice by baba
The Israeli shekel remained stable against the dollar and euro on Friday, trading at NIS 3.110 and NIS 3.488 respectively, following Wall Street's sharp decline. Global markets saw the dollar strengthen amid rising oil prices and geopolitical tensions, which also drove investors to U.S. bonds. The Bank of Israel recently held its interest rate at 3.25%, despite recent shekel depreciation and inflation concerns.
The story in 5 lines · by baba
- The dollar remained stable at NIS 3.110 against the Israeli shekel on Friday.
- Wall Street experienced sharp declines due to AI investment concerns and financing needs.
- Oil prices surged 4% to a five-month high amid Saudi-Houthi tensions.
- U.S. bond yields dropped significantly 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 morning saw stability with only minor fluctuations. The dollar was trading at NIS 3.110, and the euro at NIS 3.488, showing no significant change against the shekel. The British pound experienced a slight gain of 0.1%, reaching NIS 4.165.
Internationally, the dollar maintained its strength. The dollar index (DXY) rose 0.1% to 101.50 points. The US currency strengthened by 0.1% against the Japanese yen, trading at 156.95 yen. The euro and pound remained stable against the dollar, hovering around $1.1215 and $1.3392 respectively.
This currency market activity followed sharp declines on Wall Street the previous day. Concerns over artificial intelligence industry investments and companies' financing needs led the Nasdaq to fall 2.6%, its worst day since June, while the S&P 500 lost 1.2%. The stock market downturn, 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 flock to U.S. government bonds as a safe-haven asset. Consequently, the yield on ten-year bonds dropped over 20 basis points to 4.945%, falling below 5% for the first time since September 23 and marking the steepest daily yield decline since March 2023.
In Israel, the shekel's trading occurred after the Bank of Israel's decision on Wednesday to keep the interest rate unchanged at 3.25%. Despite a September annual inflation rate of 1.6% remaining within the stability target, rising energy prices and ongoing local and global uncertainty cast a shadow. Since the previous interest rate decision, the shekel has weakened by 3.1% against the dollar, while it saw a modest 0.3% strengthening against the euro. In recent days, the dollar has re-established itself as a primary safe-haven currency, benefiting from increased geopolitical and financial risk levels. The shekel experienced noticeable depreciation in the days leading up to the interest rate decision, with security tensions ahead of elections and fears of escalation in various arenas prompting institutional investors and foreign players to increase their exposure to dollar assets, accelerating the dollar's strengthening against the shekel.
