Gift Asset Management Ltd. predicts that the shekel-dollar exchange rate could again fall below NIS 4/$. The shekel appreciated 0.34% against the dollar to NIS 4.088/$ in options trading today. The shekel-dollar representative rate was set at NIS 4.102/$ before the Rosh Hashana holiday.
The shekel appreciated 5.5% against the dollar in the past 12 months. After falling below NIS 4/$ earlier this year, the shekel-dollar exchange rate rose above NIS 4.30/$ less than three months ago, and some analysts thought that the dollar was making a comeback. Gift chief economist Eran Basson believes otherwise.
Basson told “Globes”, “The strong link between the Consumer Price Index (CPI) and the exchange rate means that we can expect to see the CPI rise by negligible amounts or even fall in the coming months because the shekel-dollar exchange rate is falling. On the other hand, we’re also seeing domestic events, unrelated to the exchange rate, such as the hike in electricity rates and higher prices for local products.
“In other words, excluding the effect of the dollar, we’re seeing an increase in demand. Taking all these factors into account, Governor of the Bank of Israel Prof. Stanley Fischer will raise the interest rate by no more than 25 basis points, although not necessarily just now. An interest rate hike could definitely push the shekel-dollar exchange rate below NIS 4/$.”
Published by Globes [online], Israel business news - www.globes.co.il - on September 16, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007