The shekel strengthened to the NIS 4.85/$ mark at the start of today’s session, as the Israeli currency maintained its positive momentum that began with the Bank of Israel’s 2% rate hike on Monday.
At one stage, the shekel advanced to NIS 4.84/$ in inter-bank trade, but subsequently fell back. At web-posting, the shekel is trading around NIS 4.854/$, a 0.57% appreciation from Wednesday’s representative rate of NIS 4.882/$.
Meanwhile, the shekel is also advancing against the euro, which is currently sliding slightly against the dollar in world markets. The inter-bank rate for the shekel/euro currently stands at NIS 4.7756/€, a 1.38% appreciation from Wednesday’s representative rate of NIS 4.842/€.
The shekel’s gain today brings it to levels last seen in May, and signals that this week’s hike in the interest rate was enough to calm the foreign exchange market, at least for now. But yields for shekel-denominated short-term bonds are still 0.6% - 1% above the Bank of Israel’s key interest rate, which might mean that another interest rate hike will be required to achieve financial stability.
Published by Globes [online] - www.globes.co.il - on 27 June, 2002