The shekel-dollar and shekel-euro exchange rates are split following yesterday's decision by the Bank of Israel to leave its interest rate unchanged.
In morning trade, the shekel-dollar exchange rate is up 0.16% to NIS 3.4685/$ and the shekel-euro exchange rate is down 0.76% to NIS 5.4025/€.
Yesterday evening, the Bank of Israel announced that Governor of the Bank of Israel Prof. Stanley Fischer left the bank's interest rate at 3.25%, which is the lowest ever rate in Israeli history. The governor did imply that if the pace of inflation picks up, he would raise interest rates in upcoming decisions.
Tomorrow the Fed will announce its monetary policy decisions, and is expected to cut the Federal Funds rate by 0.25%. This would widen the yield gap between Israel and the US, which currently stands at 1%.
Foreign exchange firm Prico finds that levels of NSI 3.1-3.35/$ are apparently the current limits to shekel appreciation, and in the mid-term the shekel-dollar exchange rate can rise to NIS 3.78-3.82/$.
Prico notes that in the summer months, demand for foreign currency generally rises, which can pressure the shekel.
Published by Globes [online], Israel business news - www.globes-online.com - on April 29, 2008
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