The shekel-dollar exchange rate is down 0.58% to NIS 3.768/$, and the shekel-euro exchange rate is up 0.29% to NIS 5.3626/€.
Yesterday, the Bank of Israelsaid in its second quarter inflation report that the chances for a sharp rise in the exchange rate is currently low. However, the rise in direct taxes, such as VAT, is likely to lead to a one-time rise of 1% in the Consumer Price Index (CPI), as early as the third quarter of this year. The bank concludes that subsequently the danger of inflation over the next year is limited.
On Friday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.79/$, and set the shekel-euro representative exchange rate at NIS 5.3471/€.
Easy Forex said that the dollar continues to weaken, not only against the shekel but against currencies around the world. Continued dollar weakness is liable to hurt Israel's export industries and lead to hundreds, and maybe thousands, of layoffs in Israel.
With the Bank of Israel and the Treasury aware of the danger, it will be interesting to see their response if the shekel continues to strengthen against the dollar.
Easy Forex added that if the shekel-dollar rate breaks the NIS 3.75/$ level, it can push down toward NIS 3.60/$.
Published by Globes [online], Israel business news - www.globes-online.com - on August 3, 2009
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