As expected, the Israeli shekel fell at the beginning of weekly trading on Monday, against the US dollar to reach 4.06 shekels to the dollar, the lowest level since December 2014.
The rapid decline, which is expected to continue, is a direct result of the Israeli war on Gaza, currently in its 17th day.
Markets in Israel are reportedly awaiting a consequential meeting of the Monetary Policy Committee of the Bank of Israel – the Central Bank – to decide on interest rates on the shekel, in light of the economic and monetary consequences of the war.
Analysts at the Tel Aviv Stock Exchange and senior economists in Israeli banks estimate that the Bank of Israel will cut interest rates by 25 basis points to settle at 4.5%.
If analysts’ predictions are to be believed, it would be the first rate cut in Israel since April 2020, in the early days of the Covid-19 pandemic.
Interest rates in Israel currently stand at 4.75 percent, the highest since January 2007, according to Bank of Israel data.
Israel’s economic woes began in the first days of the war.
The Israeli central bank’s announcement on October 9 that it would inject up to $30 billion into local markets to protect the shekel was unsuccessful.
A week after the war started, Bank Hapoalim estimated the cost of economic losses that Israel would incur in its current confrontation with Hamas at about $7 billion.
That number however is expected to grow shall the war continue.
Israeli Economy: Facts & Numbers
- %3: The decline of the Israeli currency, the Shekel in the first day of the war.
- $30 billion: The amount of money injected by the Israeli central bank to protect the value of the shekel.
- %8: The decline in the Israeli stock market after one week of war.
- Asqalan (Ashkelon) port in southern Israel shut down.
- Work in the Tamar gas field stops.
- 42: Number of US and Canadian companies to cancel all flights to Israel.
- $30 million: Early estimates of property damage resulting from the war.
- 1,200: Number of damage claims made to Israeli tax authorities.
(PC, AJA)
