The shekel-dollar exchange rate rose 1% to NIS 3.335/$ in early morning inter-bank trading, and the shekel-euro exchange rate rose 0.32% to NIS 5.306/€.
Foreign currency traders predict that Governor of the Bank of Israel Prof. Stanley Fischer will not raise the interest rate at the end of the month, following the low 0.1% rise the Consumer Price Index (CPI) in June.
On the basis of Federal Reserve Board Chairman Ben S. Bernanke's testimony to Congress yesterday, sources in the US believe that he will keep the interest rate unchanged due to fears of a deepening recession.
The shekel-dollar representative exchange rate was set at NIS 3.30/$ yesterday, down 0.81% on the day before, and the shekel-euro representative exchange rate was set at NIS 5.289/€, up 0.2%.
Forex firm etrader does not agree with predictions that Fischer will raise the interest rate by 100 basis points incrementally over the next four months. It believes that Fischer will exploit the low rise in the June CPI to make a one-time 25-basis point interest rate hike this month, and then try to avoid making more rate hikes through the rest of the year.
etrader also believes that if the CPI rises by less than expected in the coming months, Fischer will have no reason to make additional monetary interventions.
Published by Globes [online], Israel business news - www.globes-online.com - on July 16, 2008
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