The shekel-dollar and shekel-euro exchange rates both rose today on the back of Friday's upgrade by Moody's of its credit rating for Israel. The shekel-dollar rate lost nearly 5% over last week in response to comments by Governor of the Bank of Israel Stanley Fischer about the strengthening of the shekel. Moody's followed suit after S&P and Fitch, raising its rating for Israel to "A1" from "A2". The daily representative rate will be set at 12:30 pm for the rest of this week, due to the Passover holiday.
The shekel-dollar representative exchange rate rose 0.79% to NIS 3.452/$, and the shekel-euro representative exchange rate rose 0.23% to NIS 5.475/€. Both the shekel-dollar and shekel-euro representative rates were set 1.1% lower on Friday. The shekel-dollar rate was set at NIS 3.425/$ and the shekel-euro rate was set at NIS 5.463/€.
Union Bank says, "The shekel strengthened 4.07% against the dollar last week to NIS 3.466/$, after two weeks of continuous falls which lifted the exchange rate beyond than the NIS 3.60 level, as a result of the intervention by the Bank of Israel, which bought dollars and said it would continue to purchase at a rate of $25 million a day.
"Last week also saw the announcement by the Central Bureau of Statistics of the unexpected 0.3% rise in the Consumer Price Index (CPI) in March, highlighting the strong demand in the economy at present. We note that inflation over the last twelve months reached 3.7%, a figure that underscores the strong inflationary pressures now prevalent in the economy which are weighing down growth. We therefore believe that the Bank of Israel is unlikely to make a further cut in the interest rate in the near future. The shekel-dollar rate will have strong support at NIS 3.377/$ and strong resistance at NIS 3.64/$, and trading is likely to range within this band," says Union Bank.
Published by Globes [online], Israel business news - www.globes-online.com - on April 21, 2008
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