“Fed interest rate cuts have not always helped the markets over time, but when a solution has been provided to the economic problems that were behind me.” If the US president can get the Fed to cut interest rates and within a short period of time to reach understandings with the Chinese, “We believe that the markets are exaggerating on all fronts – both in the intensity of the anticipated rate cut and in its ability to generate a positive change in the economy and in the markets over time,” they wrote.
“After the Fed itself was willing to join the interest-rate trend reflected by the markets, which led to the weakening of the dollar and accompanied by a drop in commodity prices, it appears that an increase in the interest rate in Israel can only happen if the Bank of Israel is obligated. The yields are reflected by the government deficit, “they concluded.
“The disappointing employment figures published in the US last weekend dropped the dollar against the major currencies and brought the question of the rate cut in the US to the fore,” said Yossi Freiman, CEO of Prico Risk Management, Financing and Investments. It is estimated that the Fed will make a first interest rate cut before the end of 2019. The narrowing of the interest-rate differential between the shekel and the dollar contributes to the strength of the shekel, but in view of the fact that the Bank of Israel missed the opportunity The Bank may be required to resume its direct activity, while intervening in currency trading in order to maintain the profitability of exports and prevent the decline in the nominal effective rate to historic lows. ”
“In the past two weeks the nominal exchange rate has recovered by about 2 percent, but in the past week the nominal exchange rate has weakened by about 0.6 percent and is now only 1.4 percent below the low level The weakening of the dollar to a level of NIS 3.5, may again push for intervention by the Bank of Israel in currency trading, in order to support the dollar exchange rate and prevent the severe damage to Israeli exports. The room for maneuver available to the Bank of Israel, “Freiman adds.