From the narrow Israeli point of view it is no less than a historic precedent. Never before has our local currency gained 18 percent against the U.S. dollar in a five-year period.

This never happened to the old Israeli lira, or the old shekel that existed during the period of hyper-inflation of 1977-1985, and certainly not to the New Israeli Shekel (NIS) in its first 17 years of life.

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There are two more important precedents that go along with the first: In recent years, Israeli inflation has been lower than that in the U.S.; and the Bank of Israel's short-term interest rate is significantly lower than the U.S. Federal Reserve's rate - 4 percent here compared to 5.25 percent in America.

The dollar lost another 0.12 percent yesterday and the representative rate was set at NIS 4.124 to the dollar. Also, around the world the dollar lost ground and reached 1.34 dollars per euro.

"Even if [the Bank of Israel] lowers interest rates by 0.25 percent or even 0.5 percent, it won't make any real difference," commented the manager of the Bank of Jerusalem dealing room, Eitan Admoni yesterday morning. "Only an aggressive rate cut like 1 or 2 percent would create real change. But the probability of that happening is very low."

Admoni sums up that the dollar is clearly weakening in world markets, and in the local one as well, as America struggles to cope with its gargantuan deficits, and now with the collapse of the subprime mortgages market.

For example, the dollar has lost 6 percent against the Brazilian real over the last year, and 5 percent against the Indian rupee, 12 percent against the Polish zloty, and 7 percent against the Philippine peso. The 11-percent gain by the shekel is in good company.

The precedent is not only Israeli but worldwide. The effect is seen on prices all around the world, and much of the increase in world commodity or other prices in dollar terms can be explained by the currency's weakness.

Take for example the price of oil. While world oil prices have climbed 150 percent in the last five years in dollars, from $25 to $62 a barrel, in euros the price has risen only 60 percent, and in pounds sterling 75 percent. Gold prices took a similar turn.