The shekel is continuing to strengthen against the dollar today, for the third day in a row, and the exchange rate is nearing the NIS 3.74/$ level at which the Bank of Israel intervened last week, reportedly buying $800 million in order to weaken the shekel against the dollar.
The shekel-dollar exchange rate is down 0.3% to NIS 3.7498/$, and the shekel-euro exchange rate is up 0.31% to NIS 5.5079/€.
Yesterday, the Central Bureau of Statistics reported that the Consumer Price Index (CPI) rose 0.5% in August, in line with earlier forecasts. Inflation over the preceding 12 months has been 3.7%, above the Bank of Israel's target range of 1-3%.
After the Bank of Israel raised its interest rate to 0.75%, from its historic low of 0.5%, last month, market estimates were for another rate hike by the end of the year. However, most economists currently do not expect a rate hike this month.
Barclays Capital analysts who were interviewed by "Globes" said, "The unexpected intervention by Governor of the Bank of Israel Prof. Stanley Fischer caused speculators to be careful in shekel trading, but it doesn’t matter what the Bank of Israel will do, there is still reason to be long the shekel - it is set to strengthen further."
Published by Globes [online], Israel business news - www.globes-online.com - on September 16, 2009
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