Many expected that the value of the dollar against the shekel is going to highly increase right after the Federal Reserve Bank’s decision to raise the interest rate. Experts, however, confirmed that the value of the dollar against the shekel will increase gradually, reaching 4 shekels by the beginning of 2016.

Palestine Economy Portal

Translated by: Tamara Barakat

The economic expert, Nasser Abed Al-Kareem, said that the value of the US dollar against the shekel will gradually increase to 4 shekels, if not even more, by the beginning of next year.  

He explained that the stock market will not be quickly affected by the Fed’s decision because the interest rate has been expected to be raised for a long time, and therefore, the stock exchange has already raised the value of the dollar against all other currencies in the past months.

He told the Palestine Economy Portal that the increase in the interest rate by a quarter of a point fell within expectations and did not constitute as a very high increase. Also, the Federal Reserve Bank’s conference reassured the markets that the implementation of the decision will be gradual rather than immediate. The Bank of Israel is interested in lowering the value of the shekel in order to strengthen the Israeli economy. Abed Al-Kareem believes that any step taken to strengthen the value of the shekel will not be in Israel’s favor, unless the value of the dollar surges over 4.20 shekels. This will prompt the Bank of Israel to intervene and control the inflation rate.

Hisham Abu Shammalleh, who follows the trends in the stock exchange, said that the value of the dollar against the shekel will reach 4 shekels by the beginning of the next year due to the increase in the interest rate by a quarter of a point, the unexpected decrease in the cost of living in Israel last month by 0.4% instead of by the forecasted 0.1%, and the attempts of the Bank of Israel to reduce the danger of a decrease in the inflation rate.

Moreover, Ahmed Aweidah, the CEO of the Palestine Capital Market Authority, told the Palestine Economy Portal that the Palestinian Stock Exchange was not affected by the Fed’s decision as much as international stock exchanges were. The Palestinian Stock Exchange is not usually affected by such international decisions, unlike the Gulf States where the value of the dollar is associated with oil prices. Moreover, the size of foreign investment in the Palestinian Stock Exchange is about 43% of the overall shares. Most of these foreign investments are made by Palestinians who hold foreign documents.