Written by: Aaron Katsman | March 19, 2009
The Israeli Shekel continued it’s huge spike against the US dollar this week, rising more than 4%, as news that the US Federal Reserve will buy bonds. According to Globes: “The shekel-dollar exchange rate is down 1.84% to NIS 4.048/$, and the shekel-euro rate is up 2.13% at NIS 5.521/€. The US Federal Reserve Bank yesterday left its Fed Funds rate unchanged, as expected, but surprised many investors and economists in announcing its will buy about $1 trillion in securities - $300 billion of US government bonds as well as $750 billion mortgage-backed securities. The move is intended to lower longer term interest rates and support the US economy. The move pushed Wall Street to rises yesterday, and has pressured the dollar on global markets.”
It’s sure nice to be able print money at will, and heck, those that are currently printing will be long gone when the children and grandchildren have to pay the piper.
Written by: Aaron Katsman | February 25, 2009
Well, forget about interest rate differential impacting the shekel dollar exchange rate. The fact that the Bank of Israel only cut rates by 25 basis points has done nothing to stem the free-fall of the shekel. The shekel is trading near the 4.2 level. This continues the huge run of the greenback over the last 6 months. Keep in mind it wasn’t long ago that we were at 3.2.
Many technicians are saying that a break above the 4.25 level means a straight move to 4.4-4.5.
Written by: Aaron Katsman | February 23, 2009
Apparently not wanting to empty his arsenal, Bank of Israel head Stanley Fischer announced an interest rate cut of just 0.25%. This brings rates down to 0.75%. Most economists had predicted a cut of at least 50 basis points and were caught off guard by the lesser cut. According to Globes: “Most economists believed that the current economic situation required a much greater interest rate cut, given the severe recession coupled with the beginning of deflation, and the still low shekel-dollar exchange rate. Any doubts about the seriousness of the situation ended with the economic figures published over the last couple of days. Central Bureau of Statistics data indicate that Israel has been in recession for five months, and that GDP shrank by 0.5% in the fourth quarter of 2008. The situation has only worsened since then.”
Without much in the way of government policy, as the government is in limbo, it is up to Fischer and Fischer alone, to help navigate Israel through the current economic climate.
