With Pesach fading further into the rear view mirror leavening was back on display in the currency markets, including British sterling exchange rate against the shekel rising to a level not seen in nearly two years. Meanwhile, it was easy come and easy go for the Ministry of Finance and its much anticipated proposed tax cut. Elsewhere, Bank of Israel makes it two in a row, and the city of Sderot gets set to embrace its inner southern hospitality. All that plus anticipated volatility is the flavor of the week once again at the IsraTransfer trading desk, and a steady diet of Israeli technology innovation that makes every calorie count. Ready for another satisfying helping of nourishing brain food? Then dig into our latest Israel Business Week Roundup. Bon Appetit!
From the IsraTransfer Currency Trading Desk
The tarnish is officially off sterling, as last week the GBP/NIS finally cracked through the psychological barrier 5.00, even trading as high as 5.02 on Friday! Most notably, the move marks the first time since September 2016 that we have seen the British currency at or above this level. Along with a recent (and welcome) sense of positivity surrounding Brexit negotiations, we also attribute the strong possibility of an interest rate hike at next month’s UK Monetary Policy Committee meeting as the main drivers behind the steadily improving exchange rate.
In USD/NIS exchange rate analysis, the trend continues to remain fairly stable, with trading consistently hovering around the 3.50-3.52 level. Not surprisingly, US President Donald Trump seems to be at the forefront of the news that could impact global currency trading as we head into the new week. For the moment it seems that US military strikes on Syria will not be escalating, which should have a calming effect on the currency markets as a whole. However, things could get dicey in a hurry for exchange rates should Russia elect to adopt a retaliatory position.
With an economic calendar light on announcements this week, expect the instability in Syria to add more volatility to currency trading. Add in a abbreviated trading week due to the upcoming Yom HaAtzmaut holiday, and exaggerated exchange rate swings should certainly be expected. As we have been advising for the past few weeks, those looking to exchange their money to shekels may want to take advantage of “up days,” resulting from any exaggerated movements.
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Bank of Israel Representative Exchange Rates
For the Week of April 9th thru April 13th, 2018
Israel Real Estate Update
The Yom HaAtzmaut party doesn’t kick off until Thursday, but Israel’s southern city of Sderot is already getting ready to raise the roof, as in a new “roof agreement” that is expected to yield the municipality 6,000 new housing units over the next three years. Among the other highlights of the agreement include Buyer Price housing construction bids, as well as a 350 million shekel budget for a makeover of the city’s infrastructure. Local kindergartens, daycare centers, synagogues, and more will also benefit from the development to the tune of 600 million NIS, along with new land allocations for both industrial and commercial purposes as Sderot seeks to transform itself into one of Israel’s leading locations in all aspects of life.
Although signature elements of roof agreements typically include expedited planning and permit issuance by the local authority, as well as state financing of public buildings and infrastructure, the initiatives are not without their critics. In a 2017 report, Bank of Israel warns that while these programs can reap early rewards for the municipality, roof agreements are susceptible to complications in the second stages when new neighborhoods begin to populate and the local authority assumes the responsibility of providing these new households with services not covered by government grants and other sources of funding. That said the Ministry of Construction and Housing, the Israel Land Authority, and the Ministry of Finance, and by the Sderot municipality all seem to think the risk is worth the reward, as the group gets set to sign off on the deal in the immediate future.
Bank of Israel Lightens Up On Currency Reserves
Despite purchases of over $140 million in foreign currency, government currency transfers of nearly $500 million resulted in a drop of Bank of Israel’s reserves for the second consecutive month. Efforts to offset the effects of natural gas production on the exchange rate, as well as a revaluation of the existing reserves were once again credited as the primary drivers behind the purchasing program. Of note, although Bank of Israel’s foreign currency reserves have now declined for two months in a row, the over $115 billion held still represents an increase of over $12 billion from the same time a year ago.
Israel Tax Update
Perhaps the Minister of Finance, Moshe Kahlon, spoke too soon when he intimated a tax cut was on the way for Israelis. Following the report of a less-than-expected tax revenue surplus of 700 million shekels in the first quarter of 2018, chances for the reduction have now been diminished. For those looking to point the finger of blame, it appears increases in defense spending, as well as in civilian ministries, are being seen as the main culprits behind the government’s about-face. Also among those publicly opposed to a potential tax cut include Bank of Israel Governor, Karnit Flug, who believes there is no room for a reduction given that tax revenue was only slightly higher than expected.
From the Israel Startup Scene
Wondering what a truly scalable business looks like? Feast your eyes on Tel Aviv startup, Nutrino. With an appetite for helping people live healthier, the company’s software creates personal nutritional profiles and dietary recommendations based on its users’ food consumption. Following its founding in 2011, the company has since been integrated into wearable devices including an IBM Watson-powered app providing pregnancy nutrition recommendations, as well as a partnership with Medtronic on a nutrition analytics app for diabetics. An expansion of its commercial reach is next up on the menu after receiving an $8 million investment last week, as the company seeks to sink its teeth into an even larger slice of the global health market.
Ok everyone, consider yourself officially caught up. Have a very productive and prosperous week from IsraTransfer.
Looking for the easiest way to transfer money to Israel? IsraTransfer Ltd. is Israel’s leading currency exchange firm specializing in wire transfers of US dollars, British sterling, Canadian dollars, euros, and more to Israel. Founded in 2008, and with over 1 billion NIS exchanged, we are the exclusive operators of the AACI Currency Exchange Program.