It was a “feel good week” for Israel real estate which received a little pick me up ahead of the always somber Tisha B’Av holiday. Elsewhere, for the first time in a long time the economy proved it’s full of hot air, and.it takes one to know one for Israel’s lone soldiers. All that, plus the economic calendar takes the first half of the week off at the IsraTransfer Trading Desk, and private spending literally goes pedal-to-the-metal. Buckle up and start your engine, because our Israel Business Week Roundup’s fueled up and ready to go.
From the IsraTransfer Trading Desk
It has been a bit of an up-and-down ride in US dollar trading lately, a trend that continued into last week. Excluding the occasional flight to quality due to the increased on-again-off-again military tensions in the area, the US dollar-shekel exchange rate continues to find itself in a trading range between 3.62 and 3.65. As we mentioned last week, it appears that the potential for further weakening in the shekel is limited, especially after the exchange rate’s immediate retreat back to close around 3.63 after soaring to over 3.66 as late as Thursday.
With this week’s economic calendar as light-as-a-feather, at least until Wednesday, once again geo-political instability in the region, as well as US President, Donald Trump’s, ratched up strong words of warning to Iran today should be the main drivers for the currency markets. Additionally, with a now greater possibility that we’ll see Bank of Israel raise interest rates before the end of the year (more on that later) we continue to recommend those looking to exchange US dollars to shekels to take advantage of the favorable exchange rate we’ve been seeing in the USD/NIS.
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Bank of Israel Representative Exchange Rates
For the Week of July 16 thru July 20, 2018
|Currency||Symbol||Week High||Week Low||Week Close|
|South African Rand||ZAR/NIS||0.2761||0.2677||0.2700|
This Week’s Notable Economic Announcements
The following are some announcements to be aware of that could affect prices and activity in currency trading.
|Wednesday, July 25th||AUD||Consumer Price Index|
|Thursday, July 26th||EUR||European Central Bank Rate Decision|
|Thursday, July 26th||EUR||European Central Bank Deposit Facility Rate|
|Thursday, July 26th||EUR||European Central Bank Marginal Lending Facility|
|Friday, July 27th||USD||Gross Domestic Product
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Israel GDP Grows Faster
Living in the proved profitable for the Israeli economy last week, as a second look at the State’s GDP from the first quarter resulted in an upward revision to 4.7% from 4.5%. Highlighting the move up was an acceleration of consumer spending (the economy’s largest contributor to GDP), namely an annualized 266.6% in personal vehicles! Interestingly enough, importers reported no unusual sales during the period.
Other than the runaway numbers in autos, imports of goods and services tallied 20.7% in the first quarter following just 5.5% in the previous one. Moreover, Israel’s exports of goods and services also saw a revision upwards including an annualized 15.4% and 7.7% respectively.
Israel Inflation On the Rise
Gross Domestic Product wasn’t the only element of the Israeli economy to put on a display of strength last week, as the shekel followed suit in light of a reported climb in inflation. The biggest contributor to the move up from the country’s historic low of 0.1% was due to a bump up in the Consumer Price Index during the month of June.
As to be expected the news had a strengthening effect on the shekel, especially for holders of shekels who have be desperately hoping for an interest rate hike. With the move into Bank of Israel’s target range of 1% to 3%, the forecasted raise in the fourth quarter of 2018 is now a very strong possibility. Recently concerns that it would be pushed off until the first quarter of 2019 had be a source of anxiety for those anticipating one for the first time since 2015.
Israel Property Taxes
Help could be on the way for Israel’s lone soldiers thanks to a proposed new law currently marching its way on the Knesset floor. The proposed legislation, championed by Israel’s former ambassador to the US, Michael Oren, would help alleviate the financial burdens on the State’s heroic volunteers by exempting them from municipal tax (arnona) should the bill pass into law.
As a former lone soldier himself, Oren, can relate the stresses these patriots face. In fact, the head of the Knesset’s caucus for lone soldier hopes to bolster the efforts to help the troops further with the promise of additional bills that would exempt lone soldiers from utility bills, and even special benefits for those who get married while serving in the IDF. Seriously, what’s not to love about that??
Israel Real Estate
As the iconic proverb goes “if at first you don’t succeed try, try, again” were certainly words of truth last week, especially with respect to the Israel real estate market. After what seemed like countless consecutive drops, the Home Price Index finally showed some signs of stability with the Central Bureau of Statistics’ release of its April-May 2018 numbers, showing a flattening a prices.
Additionally, building on the good news was report of slight uptick in new home prices of 0.9%, compared to the month prior. Although the good news was a very welcome sight on the surface, a deeper dive into the numbers did reveal something of a mixed bag. As we mentioned earlier this year, in the interests of gaining a more accurate read on market prices, the CBS has adopted the practice of considering individual districts as part of its reporting, In this case the analysis revealed a slight drop in Israel’s northern and central regions, offsetting the gains seen in the Jerusalem, Tel Aviv, and southern regions.
Although the increase was only a slight one and represents just one month’s performance, they do represent an increase over the same period a year ago. In light a prolonged streak of less-than-stellar developments, this one is certainly a very welcome sight.
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