Dollar dives half-percent to NIS 3.578 sparking fears of labor strike - Haaretz

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Dollar dives half-percent to NIS 3.578 sparking fears of labor strike

By Shlomi Sheffer, TheMarker

Tags: Economy, Recession, Israel

Might the Histadrut labor federation actually declare a strike because of the dollar's fall? We'll find out as the sell-off continues.

On Monday, the dollar weakened by 0.45% more against the shekel, closing at an official exchange rate of NIS 3.578.

Though the dollar has been feeble worldwide, it has lost more ground against the shekel than against most other currencies, partly because of the 1.25% interest rate gap in favor of the shekel (which makes risk-free investments in Israel, such as government bonds, more attractive than comparable U.S. assets).

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Moreover, the U.S. Federal Reserve is widely expected to be preparing for another half-percent interest rate cut next month.

Fears of recession in the U.S. and the low interest rate are leading investors to seek their fortunes in emerging markets again. Israeli share prices have benefited: Tel Aviv blue chips gained a hefty 2.6% on Sunday.

But equity analysts at Bank Leumi predict that in the medium run, the dollar will rebound. Leumi adds that market prices already largely factor in another U.S. rate cut.

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1.	Let us get real	04:39	\|	Mark Lincoln	05/02/08

2.	histadrut is israls worst ene	10:02	\|	Zionist forever	05/02/08

3.	US Dollar can ONLY get worse	11:47	\|	spyguy	05/02/08

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