The shekel was mixed in inter-bank trading this morning against the world's major currencies. The shekel continued strengthening against the dollar and was very close to the NIS 3.7/$ level but the Bank of Israel has not intervened in the foreign exchange market because the Israeli currency has strengthened against the euro and other currencies. In effect this means that the overall situation of the shekel is unchanged.
The shekel gained 0.18% in early morning inter-bank trading to NIS 3.7025/$, while the Israeli currency lost 0.22% against the euro to NIS 5.535/€. These developments reflect a general weakening of the dollar on the global markets. The dollar is down 0.2% against the euro to $1.495/€. The reason for the weakening of the dollar is the ongoing rise of stock markets worldwide. This rally increases the appetite of investors for risk and causes them to abandon safe haven like the US currency and for riskier acquisition such as stocks.
The foreign exchange market awaits today's publication of the September Consumer Price Index (CPI). Consensus is that the CPI will be unchanged though some market sources suggest there may even be a negative index of 0.2%.
The latest CPI will influence the Bank of Israel's decision on interest rates for the coming month. In September Bank of Israel Governor Staney Fischer made a minority decision to leave rates at 0.75%. Therefore, if the CPI rises more than expected, the analysts believe that Governor of the Bank of Israel Prof. Stanley Fischer will raise the interest rate for November by 25 basis points to 1%.
Published by Globes [online], Israel business news - www.globes-online.com - on October 15, 2009
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