top of page

The IsraTransfer Report - September 2019

IsraTransfer Israel Economy Update

Strength in the shekel during the month of August sends exchange rates to tumbling across the board, including a drop in the USD/NIS to a near 18 month low.

From the IsraTransfer Trading Desk

The rough summer for the USD/NIS certainly continued in the month of August.  Things looked bleak for a while as the rate dipped below the crucial psychological level of 3.50, getting down as far as 3.48.  After some anxious days that included the release of a report from Goldman Sachs suggesting that even more strengthening could be on the horizon for the shekel over the next two years the currency finally showed some welcome weakness against the USD on the heels of slowdown news in the Israeli economy.  The ensuing move led us back up to the 3.52/3.53 range, where we've found ourselves ever since.

The good news going forward is that we have not seen the 3.50 level again since the recent scare, and we have reason to believe there is now solid support to be found there.  Additionally, hints from the Bank of Israel at more aggressive intervention going forward should have a limiting effect on the strengthening of the Israeli currency.  The not-so-good news is that a trip back up to the 3.60+ level might be off the table for a while now, especially considering the daily changes in the status of the US-China trade wars.  As a result, a month of trading at the levels we are at now appears to be the most likely reality.

Israel Economy Update

Anyone who might have been expecting an interest rate increase from the Bank of Israel was best served not to have held their breath.  In a move that came as hardly a surprise to anyone, Israel's central bank elected to leave interest rates unchanged from 0.25% at its latest meeting. In fact, consensus has begun to circulate among analysts that perhaps an interest rate cut in the future could soon be up for discussion given the heightening concerns of global recession.

Additionally, citing slower economic growth (both domestically and abroad), a lower than expected Consumer Price Index reading for the month of June, as well as a reversal in the trend of rising inflation, has the Bank of Israel now alluding to a more interventionist stance on its monetary policy.  Previously having adopted a hands-off approach since taking over as Governor at the BoI, Professor Amir Yaron now appears to be changing his philosophy.  In fact, one of the moves expected to resume is the purchase of foreign currency in an attempt to weaken the shekel and help get the inflation rate back up to the middle of the target 1% to 3% range by the end of the year.

The Real (Estate) Deal

The shekel wasn't the only thing is Israel to flex its muscle in the first half of 2019, as recently released numbers from the Ministry of Finance revealed a serious continuation in the strengthening of the housing market, this time to the tune of over 50,000 apartments sold.  The impressive performance extends a year-over-year trend going back to 2017, which has witnessed increases of 6% and 8% over the same periods in the two years prior.

New housing units led the surge in purchases far and away, representing 35% of the total number of deals.  This tally included a 13% contribution (6,900 apartments) by the government's Mechir Lamishtaken (Buyer Fixed Price Plan).  Sales in the free market also seemed robust, with data reflecting an unusually steep increase in the number of homes "bought on paper" in cities such as Rehovot, Rishon LeTzion, and Modi'in.

As far as who is doing the actual buying, the evidence points to young couples accounting for more than half of the purchases made in the first half of the year, up over 10% than usual, which has helped lead the Israeli mortgage market to its highest point since 2015.  On the flip side (pun intended), investor purchases remained lackluster.  Higher taxes imposed by the Ministry of Finance appear to be the culprit behind the tepid activity that produced only 1,200 purchases in the month of June.

Aliyah of the Year??

In what could be considered one of the more inspirational Aliyah stories of late, the last Jews from South Sudan have finally made their way back home.  In a fascinating quest that took over a year and half and spanned across four countries, the new Oleh, Suzi Makoriel, and her three children were finally reunited with her mother after a decade apart. 

Originally from Ethiopia, Suzi's mother had previously attempted to make Aliyah herself thirty years ago. Along the way she was kidnapped and brought to South Sudan, before successfully immigrating to Israel ten years ago.  The new arrivals plan to live in an immigrant absorption center over the next few months while they adjust to their new lives in Israel.  Baruch haba!


Recent Posts

See All


bottom of page