There were no shortages of big deals as we said goodbye to May in a week that featured the import of an $11 billion oleh. Meanwhile the government pulled the plug on a new cryptocurrency law, and Israel’s economy still has work to do. Elsewhere, it’s the uber-focused Israeli startup with its head in the clouds, and apparently it really pays to visit Tel Aviv. All that plus things get interesting at the IsraTransfer Trading Desk. Ready to travel back in time? Then scroll down and we’ll do the rest.
From the IsraTransfer Trading Desk
Interest rates were the hot topic last week in the currency markets, especially when it came to the USD/NIS exchange rate. Not only did the US Fed raise interest rates, but also shored up any remaining doubt that it would do so again this year. In fact, the chance of three additional rate hikes instead of two has now become a legitimate reality. While Bank of Israel has indicated that it will probably raise rates itself, it almost certainly won’t happen until the end of the year. As such, the widening of the interest rates between the two currencies should only widen while we wait, and could even be something of a wet blanket on the rate that keeps it at its current level for the immediate future.
In sterling trading, the cloud of Brexit that has been hovering over the British currency is about to get even thicker, as the US announced that it will begin to impose steel tariffs on UK. The trading trend for the GBP/NIS has been one of a steady decline in the rate since making a high of 5.00 at the beginning of May, and we see nothing on the short-term horizon to potentially turn things around.
Going forward, in a week extremely light on economic data releases, we expect news to be the main driver of the markets. With the ongoing political instability in the region still on everyone’s radar, along with the US’ somewhat capricious approach to monetary policy, our expectation is for a stronger shekel over the next few weeks based primarily on its past performance, as well in keeping with the currency’s overall trading momentum.
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Bank of Israel Representative Exchange Rates
For the Week of May 28th thru June 1st, 2018
|Currency||Symbol||Week High||Week Low||Week Close|
|South African Rand||ZAR/NIS||0.2872||0.8200||0.2824|
This Week’s Notable Economic Announcements
|Tuesday, June 5th||AUD||RBA Cash Rate Target|
|Wednesday, June 6th||AUD||Growth Domestic Product|
|Friday, June 8th||GBP||Inflation Report|
|Friday, June 8th||CAD||Employment/Unemployment|
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Israel Economy Checkup
As the famous quote from the iconic Spider-man comic book goes, “with great power must also come great responsibility.” Apparently the same adage applies to the recent heroics of Israel’s amazing economy as well. Despite its booming growth that includes an unemployment decline, in its latest survey the Organization for Economic Co-operation and Development (OECD) is urging the State to invest more in education, transportation, as well health and vocational training to those currently less-than-equipped to compete in the Israeli job market.
Over on the real estate end of things, the report also shed a much needed ray of sunshine on the housing market considering its recent struggles. Although the data of late has not been particular positive, the consensus from the survey is that the housing market in fact appears steady when compared to the corresponding period of 2017, a time when housing prices rose by nearly 5.5%.
For those hoping for a hike in interest rates, good news came in the form of the OECD’s projection of a rise in wages that will lead to a consistent accompanying rise in the inflation rate. Should the range rise into the vicinity of of 1-3 percent, it most likely lead to an increase in the interest rate. Should the Bank of Israel raise rates it would be the first since 2015 that it has done so.
Perhaps we spoke prematurely last week when it comes to cryptocurrency potentially being as good as money the bank – at least as far as Israelis are concerned. In an abrupt turnaround the government’s parliamentary finance committee has elected to delay the start of a new law designed to regulate alternative financial services including Israel’s money changers and cryptocurrency-related businesses. Originally slated to go into effect last Friday, the commencement date of the new law has now been pushed back to October.
The proposed law introduced by the Israel Money Laundering and Terror Financing Prohibition Authority had previously drawn attention for its inclusion of crypto-currency related regulations for the very first time. Among the actions subject to scrutiny are transfers made using any an anonymous or geographically incompatible IP address, or funds being sent to online gambling sites. Additionally, per the new law financial service providers will be heavily encouraged to retain full documentation on any of their cryptocurrency activities for at least five years.
The draft will now be open to public until June 13th, following which time the law will make its way to the desk of Minister of Finance, Moshe Kahlon, for approval before it can go into effect. Among those bracing for the impact of the delay are plenty of members from Israel’s startup community that recently raised money via digital currency. Per the Israel Bitcoin Association, the delay will potentially affect over 40 Israeli startups that have been waiting for the law to go live in order to convert funds desperately needed to fuel their endeavors.
Tel Us About It…
Normally finding yourself as part of a top-20 list is cause for celebration, however, the wallets of Tel Aviv’s residents may beg to differ. In just released study, global financial juggernaut, UBS, ranks the Israeli metropolis as the world’s 19th most expensive when measured against 77 major international cities.
While research excludes residential rent, it does find Tel Aviv to be 32nd in terms of income levels, and 28th in purchasing power. In consumer terms, that translates out to the average person in Tel Aviv needing to work twice as much than someone in New York in order to purchase an iPhone X.
Israeli Innovation with Sky-High Ambitions
Traffic congestion on Israel’s roads may just soon be a thing of the past thanks to Israeli startup, Eviation Aircraft. A self-described Uber-meets-Tesla for airplanes, the company has set out to transform the regional travel industry through the development of its all-electric powered 11-seat aircraft. When completed the company’s CEO projects a shared ride on one of its flying taxis to cost less than a train ticket, not to mention reduce impact on the environment. Eviation’s first cloud-based solution, “The Alice,” is currently in development, and slated to make its maiden voyage sometime in 2021. Recently named the winner of Fast Company’s 2018 World Changing Ideas Award, and with test flights beginning as early as 2019, a $20 USD flight from the Golan to Eilat just may be on the near-term horizon.
Ok, consider yourself back in-the-know. Wishing everyone 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 (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.