Illustration: Dollar bill.
Illustration: Dollar bill. Photo by Bloomberg
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The dollar continued its slide against the shekel yesterday to a representative rate of NIS 3.726, despite the Bank of Israel's announcement Monday that it was lowering the base interest rate for January to 1.75% from 2%. The greenback is now at an eight-month low against the shekel.

Lower interest rates generally cool demand for a country's currency. Since mid-November, the dollar has lost about 6.5% of its value.

A strong shekel may make imported goods in Israel cheaper, but it makes Israeli exports less competitive. The shekel's strength against the dollar increases the prospect that the central bank might intervene by buying dollars, as it has done in the past in an effort to buoy the greenback and help Israeli exporters.

The euro and the pound also lost ground against the shekel yesterday. The representative rate of the European currency was set at 4.943, down about 0.2%, while the pound was set at NIS 6.03, down 0.3%.

In lowering the base interest rate for January, the Bank of Israel said it took into account slower economic growth here amid signs of possible slower growth to come.

Excluding the positive effects of the flow of natural gas from the offshore Tamar gas field, the central bank lowered its economic growth forecast for next year to 2.8% from 3%, mainly due to the global economic outlook. But if gas begins to flow from Tamar, the central bank forecasts 3.8% growth.