On the day after the Bank of Israel raised the interest rate to 2%, from 1.75%, the shekel is strengthening against the dollar, with the exchange rate moving further away from the NIS 3.7/$ level.
The shekel-dollar exchange rate is down 0.21% to NIS 3.673/$, and the shekel-euro exchange rate is down 0.41% to NIS 4.9283/€.
Governor of the Bank of Israel Prof. Stanley Fischer emphasized concerns over high real estate prices as he raised the interest rate yesterday. In its notice of the interest rate decision, the Bank of Israel said, "House prices are still increasing steeply, and housing loans continue to expand rapidly reflecting the low rate of interest and the slow adjustment of the supply of houses. The housing component of the CPI is still rising, at an even slightly faster pace than in recent months."
The Bank of Israel also raised its forecast for Israel's economic growth, and now estimates that 2010 economic growth will be 4%, up from its previous forecast of 3.7%.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.681/$, 0.325% lower than the day before, and set the shekel-euro representative exchange rate at NIS 4.9486/€, 0.115% higher than the day before. The pound was worth NIS 5.8191.
Published by Globes [online], Israel business news - www.globes-online.com - on September 28, 2010
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