July 16--Following the failure of the cease-fire and continued rocket attacks on Israel, the shekel is weakening in interbank trading this morning against the dollar and but is slightly stronger against the euro.
The shekel-dollar rate was up 0.20% at NIS 3.412/$ and the shekel-euro rate was down 0.08% at NIS 4.626/euro.
Yesterday, the Bank of Israel set the shekel-dollar representative exchange rate at NIS 3.4050/$, up 0.526% on Monday's rate, and set the shekel-euro representative exchange rate at NIS 4.6298/euro, up 0.772%.
Yesterday the Central Bureau of Statistics reported that the Consumer Price Index (CPI) rose 0.3% in June and has risen 0.5% over the past 12 months.
Psagot Investment House Ltd. cChief Economist Ori Greenfeld said, "If we add the expected influence of various government reforms to lower the cost of living, Israel's inflation environment can be expected to remain low for some time. Consequently the Bank of Israel can feel comfortable keeping the interest rate at low levels until interest rates worldwide begin to rise.
FXCM Israel Research Department said this morning, "The strength of the shekel reflects the faith investors have in the Israeli economy and that's despite the worsening security situation and the disruption to daily routine for most Israelis. Besides that the fall in the shekel-dollar exchange rate expresses the overwhelming advantage of short traders in the domestic foreign exchange market."
FXCM added, "This is a speculators game and the balanced of power continues in favor of a falling exchange rate."
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