It was literally a jungle out there in Israel business last week which saw over 20,000 Israelis take advantage of Amazon’s Prime Day, resulting in sales of 8 million NIS in just 36 hours. Elsewhere, the US is ready to help Israel air out its dirty laundry, and loose lips could sink ships for sterling at the IsraTransfer Trading Desk. All that, plus the economy finds itself in a good Mood, and running a lean startup in Israel gets an entirely new meaning. Ready to catch up on what you may have missed? The read on because our Israel Business Week Roundup is coming your way.
From the IsraTransfer Trading Desk
It was another strong and steady week for the USD/NIS as the exchange rate followed its regular pattern of trading in what has become a now familiar range of 3.63 to 3.67. After briefly dipping down to just above 3.61 back on July 9th, the rate has shown admirable resilience, successfully retesting the 3.62 level twice, and last week even refusing to fall below 3.63, leading us to believe that significant support there is now in place. Strong economic news including very robust 4.1% growth in United States Gross Domestic Product was the big headline maker for the US dollar last week, which hopes to keep the momentum going with a calendar jam packed with economic announcements that includes the US Fed’s next interest rate decision on Wednesday.
Additionally, not to be overlooked this week, as is typically the case US President, Donald Trump, will once again have everyone on the edge of their seats with his trademark bombastic rhetoric; this time threatening a government shutdown should congress fail to acquiesce to his immigration reform demands. As we have noted in past reports, however, the markets have seemingly become accustomed to President’s aggressive tone, and given the limited weakening potential for the shekel from here, we continue advising clients to capitalize on the favorable exchange rate while the getting is good.
In GBP analysis, it’s once again it’s a familiar theme for sterling as we head into a new week of trading, with Brexit taking center stage once again. This time the stakes could be higher than ever, as reports have it that Ministers are actually drawing up blueprints for the army to deliver food, fuel, and medicine should the UK now leave the EU without having reached a deal. It would appear that the government is planning for the worst, as reports have it that companies and industry groups involved in the Brexit planning are now being forced to sign non-disclosure agreements in order to avoid any alarming details from leaking out.
With this in mind, our concern is that this uncertainty will only add increased volatility to currency trading, and our hunch is that the sterling could likely weaken as a result. As such, we advise those looking to convert sterling to do so now, or be prepared to hang on for the long-term if things get dicey. That scenario could also include a trip back down to the 4.74 GBP/NIS level we witnessed on July 19th when it was announced that a failure to reach a Brexit deal could cause the EU to lose a whopping 1.5% off its GDP.
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Bank of Israel Representative Exchange Rates
For the Week of July 23 thru July 27, 2018
|Currency||Symbol||Week High||Week Low||Week Close|
|South African Rand||ZAR/NIS||0.2784||0.2684||0.2772|
This Week’s Notable Economic Announcements
The following are some announcements to be aware of that could affect prices and activity in currency trading.
|Tuesday, July 31st||EUR||Euro-Zone Consumer Price Index|
|Tuesday, July 31st||EUR||Euro-Zone Gross Domestic Product|
|Tuesday, July 31st||CAD||Gross Domestic Product|
|Tuesday, July 31st||USD||Consumer Confidence Index|
|Tuesday, July 31st||USD||Gross Domestic Product|
|Wednesday, August 1st||USD||FOMC Rate Decision|
|Wednesday, August 1st||CAD||RBC Canadian Manufacturing|
|Thursday, August 2nd||GBP||BOE Rate Decision|
|Thursday, August 2nd||GBP||BOE Inflation Report|
|Friday, August 3rd||USD||Unemployment Rate|
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Israel Mortgage Update
Historically a busy time in the mortgage market, summer in Israel stayed true to its reputation with banking experts predicting the taking of new mortgages to reach nearly 5.5 billion NIS in the month of July. The impressive statistic represents an almost 20% increase in the monthly average over the past year, fueled in part by the introduction of new properties in the Buyer Fixed Price Plan now entering the market.
Despite actual mortgage interest rates remaining flat, in many cases the same as they were for the past six months, demand in 2018 apparently seems to be growing. One additional reason for the renewed appetite appears to be large banks reaching Bank of Israel’s capital adequacy ratio targets, thus allowing them to be more aggressive in halting mortgage rate hikes, and creating increased competition. While it’s definitely too early to deem this year a runaway successt, the healthy rebound in performance from a lackluster 2017 is certainly reason to believe that more good news could be on the horizon.
Israel Economy Report
Israel’s credit market found itself in quite the good mood, as in an upgrade from Moody’s Investor’s Service from “stable” to “positive.” Although the actual rating is yet to change, the revised outlook suggests that it will be getting a promotion sometime in the next 12 to 18 months. The development marks an accomplishment ten years in the making, as the last time Moody’s boosted its rating to “A1” back in 2008.
The Moody’s upgrade also represents the second major global ratings service to bolster its outlook on the Israel economy, following in the footsteps of Standard & Poors who did so itself in August of last year. In the case of Moody’s, Israel’s robust economic growth and generous account surpluses were able to overshadow the ongoing geopolitcal unrest in the region that could have otherwise put a damp towel on the chances for the upgrade.
The otherwise rosy outlook was clouded a bit, however, by concerns over who will be taking over the reigns at Bank of Israel, and the direction he or she will be taking it, following current Governor, Karnit Flug’s, departure at the end of the year. Since ascending to the head of Bank of Israel in 2013, Flug has continued the dovish and stable policies of her predecessor, Stanley Fisher. With inflation finally showing a modest uptick, the markets have begun to wonder whether Flug will indeed raise interest rates at her last meeting later this year, or kick the can down the road and leave it to her successor – whoever that may ultimately end up being.
Israel Banking System
Exchange rates are no longer the only concerns minds of those looking to transfer money to Israel from overseas, as recently the compliance now required to do so has quickly made its way up the rankings. In an attempt to dispel its dubious reputation as one of the world’s top destinations for foreign tax evaders, Israel is cooperating with the US government in its fight against global money laundering. Under pressures from the United States’ Justice Department seeking to combat the massive amount of loss in tax revenue due to those transferring the funds to Israel, the government, led by Bank of Israel, is stepping up its efforts to stem the tide of the highly questionable practice.
While a full-service currency exchange company like IsraTransfer has taken the necessary steps to lighten the inconveniences clients are feeling, some industries haven’t been so lucky. In fact, high-end realtors have cited the heightened compliance requirements as a major hindrance in their ability to close deals, namely due foreign buyers preferring to walk away from purchases rather than be subjected to what they consider overly invasive government inquiries. Furthermore, cases have also been reported of banks actually closing customer accounts for unsatisfactory answers to the source of the funds they are holding.
To date, the probe has resulted in the recovery of over $11 billion in tax revenue by the United States Internal Revenue Service from approximately 100 banks around the world. Additionally, the crackdown extends beyond just foreign bank accounts too, including American citizens owning foreign corporations that require special forms to be filed annually, or risk facing fines in excess of $10,000. With that in mind, each case is subjective definitely consult with your tax advisor to learn more about how or if you could be affected.
From the Israel Startup Scene
After finding itself gridlocked on a pair of reports by both the Organization for Economic Cooperation and Development (OECD), and the International Monetary Fund (IMF) listing Israel among the worst in the Western World when it comes to traffic congestion, one Israeli startup is tightening its belt in the hopes of alleviating the problem. In mode of transportation that is truly more than meets the eye, the revolutionary City Transformer foldable car can collapse down in width to only one meter, enabling it to navigate roads easier, while taking up just a fraction of the room. The electric vehicles’ smart design also goes beyond its appearance, boasting personalized settings that recognize and adapt to the driver’s preferred experience – including the settings of the car, and even offering recommendations of activities going on in the area that you’re driving in!
Besides freeing space up on the road, the svelt street machines will also offer motorists another key benefit. In keeping with the less-is-more motif, up to four City Transformer cars can fit into a parking spot that could up until now could only accommodate a single vehicle. No stranger to innovative technology (or traffic jams either), the city of Tel Aviv has already begun plans for a pilot program next year that will see 50 City Transformers tested on the streets of its notoriously crowded city.
Ok, consider yourself officially back in the know. Have a very productive and profitable week from all of us here at 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.