The shekel-dollar exchange rate continues to slide, while the Tel Aviv Stock Exchange continues to break records. Today's representative shekel-dollar rate was set at 3.932, 1% lower than yesterday's rate, while the Tel Aviv 25 index climbed another 0.45% to an all-time high.
Despite the strength of the shekel, Governor of the Bank of Israel Stanley Fischer is expected to reduce the central bank's key rate by just 25 basis points to 3.3% for June.
The interest rate decision will be made in two weeks time. Investment house Psagot-Ofek said today that, without a change in the exchange rate against the dollar and stabilization of energy prices, Israel's inflation rate would be brought back within the raget range, which it is currently undershooting, only at the end of the first quarter or at the beginning of the second quarter of 2008.
Manufacturers Association president Shraga Brosh has called on the government "to help manufacturers before a disaster happens." Brosh was speaking at an emergency conference of the exchange rate crisis held by the Manufacturers Association in Tel Aviv yesterday evening, with the participation of some 150 exporters and industrialists.
Brosh added that "the government should act determinedly to preserve the competitiveness of Israeli industry, which lays the golden eggs." He said that if the shekel continued to strengthen this would mean the loss of 35,000 jobs. He estimated that if the interest rate were lowered by only 0.5% by the end of the year, the shekel-dollar exchange rate would reach 3.96, but that if the interest rate were lowered by 2%, the exchange rate would climb to 4.1.
Published by Globes [online], Israel business news - www.globes.co.il - on May 16, 2007
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