Chag season officially arrived early last week, as the Israeli economy received some festive news of its own.  Meanwhile, cryptocurrency in The Holy Land journeyed one step forward, although the housing market took yet another one back.  Plus new US tax reforms mean cuts for expats, and the honeymoon appears over for sterling at the radar at the IsraTransfer trading desk.  Ready to catch up on what you may have missed ? Then read on for the latest Israel Business Week Roundup.

From the IsraTransfer Trading Desk

Last week was certainly an odd one in the currency markets, especially in England.  While a Royal Wedding would typically bolster sterling due to a “feel good factor,” unfortunately the British currency continued its slide backwards since the GBP/NIS traded above 5.00 not too long ago.  

As we mentioned previously, the reversal in the sterling continued on reduced expectations of an interest rate hike later this year.  Those expectations took yet another blow, as they have now gone from doubtful to almost certainly not. Additionally, news relating to Brexit has compounded the negativity surrounding sterling as the markets worry about what type of deal will be made over the Northern Ireland border issue.  Inflation news, the consumer price index, and gross domestic product are the highlights of the week on the UK economic calendar, and we will definitely be keeping an eye on all of them closely.

In USD/NIS trading, the rate has continued to remain  steady consistently hovering around the 3.58-3.60 range,  While there is still a long way to go for any real difference to actually play out, there seems to be some positivity surrounding the talks between the US and China over trade policy,  but there is a long way to go for any real difference to happen. With the minutes from the last US Federal Open Market Committee meeting the only main economic data expected out of the United States this week, we don’t see anything else that could dramatically impact the rate over the next five trading days, and thus would expect to find the rate in pretty much the place it is now come Friday.  Stay tuned…
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Bank of Israel Representative Exchange Rates

For the Week of May 21st  thru May 25th, 2018

Currency Symbol Week High Week Low Week Close
US Dollar USD/NIS 3.6001 3.5722 3.6059
British Pound GBP/NIS 4.8763 4.8185 4.8763
Euro EUR/NIS 4.2951 4.2139 4.2951
Australian Dollar AUD/NIS 2.7035 2.6800 2.7083
Canadian Dollar CAD/NIS 2.8128 2.7839 2.7951
South African Rand ZAR/NIS 0.2935 0.2794 0.2794
Swiss Franc CHF/NIS 3.6092 3.5710 3.6020


This Week’s Notable Economic Announcements

Date Currency Announcement
Wednesday, May 23rd  GBP Consumer Price Index
Wednesday, May 23rd  USD FOMC Minutes Released
Friday, May 25th  EUR OECD Economic Forecasts
Friday, May 25th  GBP Gross Domestic Product
Friday, May 25th  USD Durable Goods Orders

*Source: DAILYFX

Israel Economy Checkup

The omer wasn’t the only thing being counted over the past few months, as newly released data by the Central Bureau of Statistics showed growth in the Israel’s GDP of 4.2% in the first quarter of 2018.  The numbers were a surprise to the upside, as consensus taken in a Reuters poll had expectations pegged at 3.9%. Leading the way in the move up were continued strength in exports, as well as an increase in government spending.  Additionally, the CPI rose 0.4% over the same period, suggesting a climb in inflation that may very well result in a much anticipated interest rate hike by the Bank of Israel sometime towards the end of 2018.

Israel’s New Kid on the Block(chain)

Israeli owners of cryptocurrency received a bit of good news last week as at least one financial institution officially accepted a deposit of funds resulting from the sale of Bitcoin.  In light of a Tel Aviv District Court recommendation, Bank HaPoalim officially reversed course and has decided to take in the nearly USD $200,000, ruling that the transaction was not used to mask illegal money laundering activities.  The development marks yet more progress in the State’s adoption of cryptocurrency, building on the diamond industry’s unveiling of two forms of its own earlier this year. With the Bank of Israel also said to be exploring an official State cryptocurrency as well, we may just well be witnessing a new era of e-commerce in the land of milk and honey.                          

Israel Real Estate Market

The United States government may have have acquired its new home last week, however, the same can’t be said for many of Israel’s other residents over the first quarter of 2018.  Disappointing data released by the Central Bureau of Statistics showed a continuation of lower new home sales by 4.4% during the first three months of this year, with the city of Jerusalem leading the way.  Furthermore, home prices in the month of February initially believed to have dropped by 0.2% has now been revised even lower to 0.5%.  The sustained drop marks the first time in a decade that housing prices have gone down over a 12-month period, and has some experts even believing that we have yet to reach a bottom in the market.

Israel Tax News

The ripple effect of the United States new tax reform has officially made its way across the ocean and reached the shores of Israel.  Among the impacts  of the newly approved laws American expats are bracing for include the loss in their ability to deduct foreign property taxes on their holdings overseas.  Additionally, itemized deductions at the US federal level have been eliminated, leaving only state and local income taxes (and a few others) as options for Americans living abroad.  Not all the news is less favorable, however, as parents of those under 17 may benefit from a doubling of the child tax credit to $2,000 per child, which may potentially help to offset the loss of some of the deductions.  As always, we suggest checking with your personal tax advisor to learn more about how these changes can affect your personal situation.

Ok everyone consider yourself back in-the-know.  Have a very 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 (USD), British sterling (GBP), Canadian dollars (CAD), euros (EUR), 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.

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