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Dollar rate drops to NIS 3.19, its lowest value in 24 years

US currency has slipped consistently over the past 2 weeks, reportedly amid expectation that Democrats will take control of the Senate and increase welfare handouts

Dollars and shekels (photo credit: Olivier Fitoussi/Flash90)
Dollars and shekels (photo credit: Olivier Fitoussi/Flash90)

The dollar dropped to its lowest value against the shekel in the past 24 years on Wednesday as financial markets kept an eye on the outcome of the runoff in the US state of Georgia that seemed set to confirm Democrats taking control of the Senate.

Losing 0.5 percent, the US currency dropped to NIS 3.186 at time of publication, a level not seen since April 1996.

It was the 13th day out of the last 15 days that the dollar has slid, according to the Calcalist financial website.

A Democrat win would likely bring an increase in domestic economic aid packages, impacting the dollar’s value, according to the report.

The dollar index rate, taken against a basket of six currencies, has also dropped to 89 points, its lowest in two and half year.

The euro and the British pound both rose 0.3% against the dollar, the report said.

Bank of Israel Governor Amir Yaron said earlier this week the central bank would intervene in the foreign currency market to keep the rise of the shekel in check. The shekel appreciated almost 7.5% in 2020 against the dollar, prompting the Bank of Israel to buy a record $20 billion in the foreign exchange market over the course of the year, Yaron said.

Bank of Israel governor Amir Yaron at a press conference on March 31, 2019. (Yonatan Sindel/Flash90)

“This has moderated the appreciation,” he said. “And we will not be shy to continue to use this tool as long as the economy is in a crisis.”

The central bank revised upwards its macroeconomic forecast for the coming two years, estimating that the GDP contraction in 2020 will come in at 3.7%. GDP is expected to grow by 6.3 percent in 2021, and the broad unemployment rate is expected to decline during the year to 7.7 percent of the labor force in the fourth quarter of 2021 — assuming the nation’s rapid inoculation program continues and allows the economy to begin its recovery.

Over 1.2 million people have already been vaccinated, or some 12% of the population, making Israel a global leader in the percentage of vaccinations per capita.

Even so, the nation has entered its third lockdown this year and the pandemic is continuing to spread, with 59,229 active cases in the country as of Wednesday morning after 8,164 new cases were confirmed the day before. The death toll rose to 3,495.

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