Shekel Continues to Climb: Dollar Below 3 Shekels, Euro at 3.45 Shekels

The shekel continues to climb against the two leading currencies, both of which fell by more than 1% yesterday. Amid a period of calm in global foreign exchange markets, the dollar is down by 0.4%—following a 1% retreat yesterday—and is trading below 3.00 shekels. The euro is down by more than 0.5% and is trading above 3.45 shekels.

In global markets, the dollar index remains stable against a basket of leading currencies at 99.8 points, the euro is stable above 1.15 dollars, the pound is holding above 1.34 dollars, and in Japan, the dollar is seeing a slight decline of 0.2% to 157.5 yen. Investors are primarily awaiting updates on contacts regarding an agreement between the USA and Iran to end hostilities and open the Strait of Hormuz, which, if achieved, would likely ease pressure on oil prices and their subsequent inflationary impact.

US Treasury Secretary Scott Bessent stated in an interview with CNBC yesterday that an agreement leading to the opening of the Strait of Hormuz could be signed as early as Tuesday or Wednesday.

"We are having conversations with the Iranians, — Bessent said. — There is a chance we will reach an agreement as early as today or tomorrow that will allow the strait to be opened and to move toward a more normal situation in the conflict."

However, Tony Miano, a global bond analyst at the investment division of Wells Fargo, noted yesterday that even if oil shipments resume, it may take time for the market to feel the effect.

"It may take time until the fundamentals of the oil market stabilize, and even longer until consumers feel significant relief in fuel prices, — he said. — As a result, inflation is not expected to return to a normal level overnight."

According to Miano, while energy-related inflationary pressures may moderate, broader inflation could remain stubborn in the near term, limiting the extent of a possible decline in government bond yields.