The shekel is strengthening significantly against the dollar, in the first day of inter-bank trading following the Bank of Israel's interest rate hike on Sunday evening.
The shekel-dollar exchange rate is down 1.14% to NIS 3.7073/$, and the shekel-euro exchange rate is down 0.56% to NIS 4.9764/€.
On Sunday, Governor of the Bank of Israel Prof. Stanley Fischer raised the interest rate 0.25% to 1.5%. Fischer explained that the move was part of a gradual return to "normal" interest rate levels, as he moves to keep inflation within the 1-3% target rate.
Foreign banks have generally been supportive of the decision to raise rates. Morgan Stanley analysts see rate hikes of 1.5% by year end, but say they will be limited and gradual.
Friday, March 26 was the last day that the Bank of Israel set representative exchange rates. The shekel-dollar representative exchange rate was set at NIS 3.75/$, 0.027% higher than the day before, and the shekel-euro representative exchange rate was set at NIS 5.0042/€, 0.064% lower than the day before.
Published by Globes [online], Israel business news - www.globes-online.com - on March 31, 2010
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