Forex Blog: Currency Trading News & Analysis.

September 4th 2006

Israeli Shekel may be undervalued

Many investors watched the recent Israel-Lebanon conflict with bated breath, in order to gauge how the crisis would affect Israel’s economy. While the conflict will certainly diminish Israel’s prospects for growth this year, economists are predicting that its economy will still expand by a healthy 5%. Venture capital and private equity continue to flood Israel, and Israel’s interest rates remain at an attractive level. Meanwhile, its current account surplus exceeds 3.5% of GDP. In short, economists estimate the Israeli Shekel is undervalued by 13.5% against the USD and up to 30% against a broader basket of currencies. The Business Online reports:

These two trends are likely to continue thanks to strong growth in productivity which is making Israeli goods and services more competitive in the world markets, further boosting the case for a stronger shekel.

Read More: Shekel is proving to be bullet-proof

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