An Israeli Economic Report Predicts the Dollar Exchange Rate Against the Shekel in the Coming Months

SadaNews Economics - The economics section of the Hebrew newspaper Yedioth Ahronoth described the ongoing fluctuations in the dollar exchange rate against the shekel as a wake-up call that requires understanding the factors currently influencing local and global markets.

According to the newspaper, as translated by SadaNews's economics section, the current fluctuation shows that the local market is more sensitive than ever to a set of four variables: interest rate policy, the intervention of the Bank of Israel, geopolitical risk premiums, and global trends.

The site states: Looking at the next six months, economic forecasts indicate that the exchange rate will fluctuate between 2.85 and 2.95 shekels per dollar.

These developments come ahead of the possibility that the Bank of Israel, according to some estimates, will lower interest rates early next month, a step that could slightly weaken the shekel against a basket of foreign currencies.

The newspaper noted that this directly affects the dollar exchange rate on import prices, and thus on the inflation rate.

Despite the exchange rate fluctuations, the consumer price index in Israel is expected to decline, partly due to the seasonal drop in air travel and vacation prices.

For the ordinary investor, the dollar is a key element in their investment portfolio. If an investor holds mutual funds or exchange-traded funds that track U.S. indices (without hedging against currency fluctuations), a rise in the dollar's value increases your return in shekels, while a decrease in its value erodes the profits you achieve on Wall Street.

It is considered that attempting to predict the timing of the foreign exchange market (buying at a low price and selling at a high price) is fraught with risks and has always been a gamble.

It stated: Alongside the obvious security risks in Israel, there are influential forces in the United States, as the latest employment report there surprised with its strength, showing the addition of 172,000 jobs, which significantly reduces the likelihood of the U.S. central bank cutting interest rates soon.

It added: The continued rise in the dollar interest rate in the long term supports the continued increase in its value globally, making it difficult for the shekel to maintain its stability.

It continued: The dollar has always been and remains a key and important tool for risk distribution in the Israeli investment portfolio, especially in times of security and political instability, but this does not warrant concern over the continuous slight daily fluctuations.