The shekel-dollar exchange rate has continued to rise in inter-bank trading this morning. The shekel has been under some pressure in recent days because of rumors that the Bank of Israel plans to cut interest rates at the end of February. The prime minister is due to hold a meeting today with economic ministers and officials, including Governor of the Bank of Israel Stanley Fischer, to discuss the implications of the weak US dollar.
Fischer declared this week that he had no intention of intervening actively in the local foreign exchange market. His statements were in opposition to calls from both industrialists and Histadrut (General Federation of Labor in Israel) chairman Ofer Eini for a cut in interest rates to curb the strong shekel and protect exporters. Among other things, Fischer argued that such intervention would draw a strong reaction from members of the OECD, which Israel aspires to join.
On world markets, trading in the dollar takes place against the background of productivity figures in the US showing a rise of 1.8%, indicating that US business is managing to maintain its efficiency, easing inflation worries. On the other hand, fears of a recession in the US continue to grow, with futures contracts pricing in a 90% chance that the US Federal Reserve will make a further 0.25% rate cut at the next scheduled meeting of the Federal Open Market Committee on March 18, after a 1.25% cumulative cut over the past two weeks.
The shekel-dollar exchange rate is currently 0.76% higher than yesterday's representative rate, at NIS 3.6535/$. The shekel euro rate is 0.83% higher, at NIS 5.3436/€.
Published by Globes [online], Israel business news - www.globes.co.il - on February 7, 2008
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