The Israel business world truly hit the ground running this past week, as fresh off the heels of the Israel – India business summit the economy experienced a new first that may potentially be worth some extra credit. Elsewhere our trading desk sees the shekel exchange rate rollercoaster ride continuing, and the government does away with some of the country’s local customs. Plus, housing data proves there’s truly no place like home, and the Holy Land is recognized as an innovation nation. What in the world could we possibly mean? Read on to find out.
From the IsraTransfer Trading Desk
It was another crazy week for the shekel, as once again the exchange rate against the US dollar attempted a recovery in light of comments from US President, Donald Trump, seeking a stronger dollar. Following a brief rise back towards the 3.45 USD/NIS level, the exchange rate retreated below the perceived “key psychological support level” of 3.40, and even dipped down to 3.38 before finishing up at slightly above 3.39. US trade policy has proven the primary driving force behind the US dollar’s recent display strength (or lack thereof) – which is something we don’t expect to change. Looking forward, we expect the erratic behavior in trading between the currency pairing’s exchange rate to continue in a week filled with economic announcements that includes both the US Federal Reserve’s interest rate decision on Wednesday, and US unemployment data on Thursday.
Elsewhere, the British sterling exchange rate against the shekel (as well as a basket of other currencies) has reached its highest levels since Brexit. We have even seen recent highs of 4.85, and while it has pulled back somewhat, it still remains above 4.80, with the general feeling that Brexit (so far) has not been as bad as expected. That said, we expect volatility once again this week given the full calendar of economic announcements, and we will be paying particular attention to Bank of England Governor, Mark Carney’s, comments on Tuesday and its potential effects on sterling. So buckle up, because we may just be in for another bumpy week of trading, but hey, what else is new??!!
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Bank of Israel Representative Rates
For the Week of January 22nd thru January 26th, 2018
|Currency||Week High||Week Low||Week Close|
|South African Rand||0.2880||0.2800||0.2859|
Israel Economy Snapshot
It was a record setting month for Israel’s economy as the ratio of debt-to-GDP fell below 60% for the first time ever. A key indicator of Israel’s financial soundness, the ratio also plays a significant role in determining the country’s credit rating. The positive data, along with S&P credit rating agency recent revision of Israel’s rating forecast to “positive,” now increases the likelihood of a credit upgrade for Israel in the coming year.
Despite the rosy news, some work remains to be done as Israel continues to lag behind most developed countries on the World Economic Forum’s Inclusive Development Index. The annual assessment of the economic performance and health of over 100 countries measures 11 economic progress indicators beyond GDP, including employment, poverty rate, and public debt just to name a few. Additionally, political unrest in the US is also popping up as a potential cause for concern when it comes to Israel’s overall financial stability.
Israel Real Estate
It’s been an up-and-down time lately for the Israeli housing market as the new housing prices index released by the Central Bureau of Statistics advisory committee revealed home price trends differing by location. While both the Jerusalem and Tel Aviv areas experienced declines in October through November, increases were made in the Haifa and central districts. Published for the first time (previously the Bureau’s reports referenced only changes in prices at a State level), going forward the index will refer to each district separately in the interests of gaining a more accurate monthly picture.
In other real estate news, the Bank of Israel warned that although the State’s banking system remains stable, the exposure of the economy to a sharp downturn in the housing market remains its biggest risk. In its report, the economists explained that although the number of new homes purchased has grown, total deals continue to be low, along with a downtrend in mortgages. As such the BoI continued to classify the intensity of the exposure to the housing and asset markets between July and December of last year as “medium-high.”
Something From the Duty Free Shop?
Looking to do a little duty-free shopping? Then head on over to your local pharmacy, toy, clothing, appliance stores, and more because Israel Minister of Finance, Moshe Kahlon, has just signed an order abolishing selected customs duties on even more products as part of his ”Family Net” program. Designed to lower prices and reduce the cost of living in Israel, the expanded list now includes clothing, home electrical products and appliances such as refrigerators, freezers, stoves, and more; joining the previously abolished duties on perfumes, cosmetics, toys, and sports accessories. So, if you’ve been looking to upgrade your wardrobe or home appliances you may not want to delay, as the temporary order is currently slated to remain in effect only through December 2018.
Israel Science & Technology
It may not be large in size, but Israel definitely made a big splash on the global stage last week when it found its way onto the top ten of Bloomberg’s Innovation Index for the second year in a row. Most notably were the State’s first-place finishes in both the R&D intensity and research concentration categories. With a handful of Israeli companies riding the wave of Amazon’s checkout-free shopping, and one working to produce the world’s thinnest laptop charger, don’t be surprised to see an even higher ranking in next year’s poll.
Ok everyone, consider yourself officially caught up. Have a great and very prosperous week!
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