Evolutions of the Israeli shekel
In recent weeks we have witnessed the rise of the shekel which has risen above 4.20 against the euro; in parallel it is interesting to observe that the dollar is trading at 3.63 against 3.58 compared to this beginning of the year.
Some predictions gave a shekel / dollar at 4.04 in 2020 and a euro / shekel at 4.20. It is curious to see that we arrived there before the end of 2017. Some economists predicted in the short term a price of the euro / shekel between 4.21 and 4.32 over the whole of the year 2017 or more because if the bar of 4.32 yielded that could lead to 4.45.
What happened during these two months so that we see a variation of 8%? Is this due to the euro or the shekel?
Indeed, this fluctuation is not due to the decline of the shekel but to a growth of the euro zone of 0.6% in the second quarter of 2017 which led to a strengthening of the euro currency.
On top of that, investment is up 8.5% in Q2 2017 in almost all member countries of the euro zone.
On the contrary, we can not say that this is the case for US growth. We can see a drop in the dollar through rising interest rates. Janet Yelen, the president of the Fed commented on the gradual end of this increase, explaining that they should remain between 1% and 1.25%.
However, we are far from the rate we had experienced ten years ago when the shekel was 5.90 for a euro even if the shekel today knows unexpected variations.
Yossi Franck, CEO of Energy Finance explains that 80% of the variations experienced by the shekel this year is pure speculation, not really related to real economic factors. This allows us to conclude that the variation in the currency is not related to the strength of its economy.
The Israeli Shekel has become over the years a strong currency or even refuge, making it a most sought-after motto. Indeed, the Israeli economy is defined by many experts as being strong.
These are the leverage effects that make it possible to make gains in the currency market so we can understand that the currency of a stable economy is more popular than that of a young economy.
As far as the Israeli case is concerned, in a record 70 years this brand-new country has managed to rise to the same level as the strongest and most traded currencies such as the dollar, the euro or the yen.
It is necessary to temper things, we are indeed quite far from the level of the exchanges of these however, the economy of the state of Israel does better than the US and Europe.
During the course of this year 2017, Mizmaa the famous Chinese investment fund has announced its desire to invest more than 100 million dollars. In recent years, China has become Israel's second largest partner with 2.7 billion in investment in 2015 and more than 8 billion in bilateral trade.
However, the Israeli state fears for the economic independence of the country because the Chinese are present on several major Israeli infrastructure projects, to the point that the Ministry of Finance has vigorously opposed a purchase of the insurance company Phoenix by fear for savers and the capital market.
Israel's largest small country has not finished surprising, next state of the art in a few years.