Japanese Yen Strengthens After Coordinated Intervention; Israeli Shekel Stable Against Dollar

The Japanese yen continued to strengthen following a rare coordinated currency intervention by Japan and the United States last Friday, aimed at halting the yen's decline. The Japanese Ministry of Finance confirmed the joint action and signaled readiness for further interventions if necessary, with Finance Minister Satsuki Katayama emphasizing close cooperation with the U.S. Treasury. The yen rose from 163.73 to 157.57 per dollar after the intervention and further strengthened to 156.5 yen per dollar on Monday.

In Israel, the shekel showed slight fluctuations at the start of August trading, trading at 3.05 shekels per dollar and around 3.52 shekels per euro. The shekel had depreciated by 3.2% against a basket of currencies in July. Global markets saw a 0.2% drop in the dollar index to 99.7 points, with the euro stable above $1.15 and the pound slightly down to above $1.34.

Inflation pressures in Israel remain influenced by volatile fuel prices, which recently crossed 8 shekels per liter, marking an 8.2% monthly increase due to rising oil prices, refining margins, and shekel depreciation. Analysts expect fuel prices to fall in September if tanker movements in the Strait of Hormuz resume, which would moderate inflation. The consumer price index for August is forecasted to rise by 0.9%, with a slight correction expected in September.

Bank Hapoalim economists maintain a 2% inflation forecast for the coming year, assuming the government raises indirect taxes or regulated service prices early next year. The current inflation implied by derivatives markets stands at 1.7% for the next 12 months but could decline if oil prices drop. The Bank of Israel's interest rate is considered within a "comfort zone," effectively cooling real estate demand without harming economic activity. Markets anticipate a possible 0.25% rate cut by year-end if fuel prices decrease as expected.