The Bank of Israel's interest rate increase supports the shekel.
The shekel continued its appreciation against the dollar today, following the Bank of Israel's decision yesterday to raise the interest rate by 25 basis points to 4%.
The shekel-dollar exchange rate, which stood at NIS 4.34/$ at the end of July, was set today at NIS 4.125/$, an increase of 4.95% over that time. The shekel-dollar exchange rate rose 0.72% today. The shekel-euro rate was set at NIS 5.637/€.
Finotec notes that Governor of the Bank of Israel Prof. Stanley Fischer has still "not said his last word" regarding raising interest rates further to 4.25% by year end. The main consideration is the level of inflation. As the rate of inflation has begun to rise over recent months, there is more of an incentive for the central bank to lower demand by raising rates. Yesterday's interest rate increase supports the shekel, and it is appreciating against the dollar.
Published by Globes [online], Israel business news - www.globes.co.il - on August 28, 2007
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