Morgan Stanley analyst Tevfik Aksoy, after a recent visit to Israel, now says, "The fight to prevent shekel appreciation is a losing battle". Aksoy expects the shekel to appreciate to NIS 3.55/$ by the middle of 2010, and to reach NIS 3.38/$ by the end of that year.
The forecast for currency strength accompanies Aksoy's optimistic outlook on Israel's economy. He finds that the recession, which he says is now over, was shallow and short. He attributes that to a lack of toxic assets on Israeli banks’ balance sheets, the absence of a real estate price bubble, and mortgages which were backed with adequate collateral. However, the analyst also gives credit to the response by the Bank of Israel, which cut interest rates to historic lows, and to the fiscal policy adopted by the government.
Following his meetings with major figures in Israel's economy, Aksoy revised upward his growth forecast for Israel's GDP, and now has the most bullish forecast on Israel's economy. He now expects positive growth in 2009 (despite the just-ended recession) of 0.2%, up from his previous call of -0.8%, and expects 2.7% growth in 2010, up from his previous estimate of 2.1%.
Published by Globes [online], Israel business news - www.globes-online.com - on September 13, 2009
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