Israel Set to Intervene as Gas Inflates Shekel: Chart of the Day
Israel’s central bank will probably intervene to weaken its currency as prospects for a natural-gas boom push up the shekel, hurting exports, I.L.S. Brokers says.Another bit of inflation--Keynesian defense spending:
The CHART OF THE DAY shows how the shekel’s value against a currency basket used by the Bank of Israel has appreciated since the second half of 2012, indicated by the falling red line. The shekel’s gain this year breaks its correlation with moves in the extra yield Israeli assets offer over those of trading partners, in yellow, a gap that has shrunk as the central bank cut rates.
“The shekel rate appreciated sharply in recent months although the interest-rate premium narrowed,” said Modi Shafrir, chief economist at Tel Aviv-based I.L.S. Brokers. “The decorrelation is mostly due to the production of natural gas, a fact supporting renewed currency intervention.”...MORE
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