Israeli Shekel Strengthens Against Dollar as Rate Cut Expectations Fade
The Israeli shekel strengthened against major currencies as the dollar traded near 3.17 shekels. Analysts cite global market trends and political uncertainty while noting that interest rate cut expectations have faded.
The Israeli shekel strengthened at the opening of the trading week against major currencies, with the U.S. dollar falling 0.5% against the local currency to around 3.17 shekels, while the euro dropped 0.4% to trade near 3.54 shekels. Globally, the dollar softened slightly as markets awaited upcoming U.S. inflation data for October.
According to analysts at Bank Hapoalim, the shekel's recent depreciation is driven by global equity market declines and political uncertainties. Economists noted that Israel's lack of a current account surplus exacerbates market sensitivity to political events and volatility. Furthermore, market expectations for a near-term interest rate cut have faded due to the depreciation and political ambiguity, with the 10-year Israeli bond yield ticking up to 4.25%.
Meanwhile, analysts at Leader Capital Markets, led by Jonathan Katz, revised their inflation forecast to 2.4% for the coming year, up from 2.3%. The adjustment reflects recent shekel weakening alongside falling global oil and agricultural commodity prices.
