New York, March24, 2015 - Israeli investors must be prepared for the situation when the US Dollar will cross the 5 NIS threshold, a high unseen since the USD-NIS trade of 2002 then at itsall-time record of 5.01 shekels per Dollar. This is an ongoing change which reflects the strengthening of the Dollar against the entire range of global currencies included and the NIS in particular. So said Joseph Grinkorn, Morris Group CEO and Wall Street investment expert.
Grinkorn noted that the Israeli market is in the middle between the recovering US market and the European market which continues to show weakness compared to the other major markets including Asia. Grinkorn estimates that in light of current market conditions it would not be a surprise to see the Euro go down well below the level of one Dollar per Euro, as we will see in Israel the Euro will go down below the level of 4 NIS per Euro.
Grinkorn further estimates that the low interest rate environment will continue to exist even in the US market at least until the beginning of 2016. A low interest rate environment, together with the intrinsic strength of the US market compared to other markets, will lead investors to continue investing in securities and assets whose value is denominated in US Dollars. In any case, a minor increase in US interest shall not constitute a material change to the US market which is expected to continue to present significant strength comparing to other markets in the coming year. In view of strengthening consumer confidence, lower unemployment and weakening oil prices which free billions of American Dollars for consumption and investment, instead of energy.
In general, increasing the component exposed to Dollar portfolios is the right decision at this time, despite the high costs of the Dollar, it may in the medium term, continue to strengthen against the Israeli shekel, but also against the Yen, Euro, Pound and in fact each currency in the world in the currency market.
The continued depreciation of the NIS against the US Dollar is likely to be a catalyst for promoting processes of mergers and acquisitions of Israeli companies by US companies. A weak NIS against the Dollar will encourage US investors to invest in real estate, securities and companies, as well as encourage inbound tourism to Israel from the United States enjoying attractive exchange rates.
Grinkorn previously noted that cheap oil and zero interest rates usually reflect a state of crisis in the markets. Currently low interest rates create a norm of cheap currency to which the market have gotten used to, it also has gotten used to cheap oil which is expected to remain at current levels in the long term. Increase of oil to 100$ per barrel may send the markets into sharp declines. A stronger Dollar, reflecting the past crisis situation, increasing investors' Dollar position to reduce risks, today simply reflects the strength of the US economy compared to other economies. Recovery of Asia, led by Japan and China, who are still in transition and still aren’t showing an increase in growth rates may change the economic situation in the US which for the time being is strong, the Asian economy is transferring large amounts of capital and purchases to American Dollars.
The Morris Group Companies specializes in equity investments for private and public social media and technology companies, high return real estate investments and commercial / residential financing.
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