The shekel-dollar rate is currently down 0.47% at NIS 3.4605/$, and the shekel-euro rate is down 0.5% at NIS 5.4524/€. The shekel-dollar representative rate was set 0.258% lower yesterday at NIS 3.477/$, and the shekel-euro rate was set 0.047% higher at NIS 5.4798/€.
The shekel-dollar rate fell in interbank trading this morning following yesterday's 25 basis point interest hike by the Bank of Israel, which has raised the interest rate to 4%. This is third consecutive 25-basis point increase.
The latest interest rate announcement did not include a sentence that appeared in the two previous announcements, in which the central bank said it would raise the interest rate further if necessary. This amounts to a clear hin - and the central bank makes a point of ensuring transparency in its monetary policy - that this is probably the last interest hike for the time being. In other words, the Bank of Israel will leave the interest rate unchanged in September.
Online foreign currency broker Easy Forex says it appears that Fischer remains concerned about inflation. The Bank of Israel said in its accompanying announcement yesterday that it would continue to monitor developments in the Israeli economy and overseas and would take action to maintain price stability. The central bank apparently still finds inflation worrying, given that it raised the interest rate despite the surprisingly low rise in the Consumer Price Index (CPI) in June.
Published by Globes [online], Israel business news - www.globes-online.com - on July 29, 2008
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