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Dollar at 11-year low vs. shekel By Yuval Maoz Tags: Israel, Oil, Dollar, Shekel The dollar is continuing its free fall, sinking 0.7% Thursday and 2.5% for the week to a representative rate of NIS 3.338 to the dollar. That's an 11-year low for the U.S. currency against the lowly shekel. Trade took place Thursday in the shadow of rising petroleum prices, which climbed to $135 a barrel. The first time the Bank of Israel intervened in dollar trading, on March 13 this year, the dollar was at NIS 3.35 - marginally higher than Thursday's closing rate. Advertisement The euro rate was set at NIS 5.25 per euro, for a decline of 0.7% over Wednesday's representative rate. In world markets the dollar remained steady at $1.579 to the euro. "There are no estimates regarding a change in the trend in Israel," First International Bank of Israel (FIBI) trading room head Dror Zaks said. "The pressure on the Bank of Israel to raise interest rates is increasing, even though an increase amounts to lip service because the bank cannot cope with the inflation that would be caused by the rise in prices and external factors," Zaks said. "Yesterday we broke through the NIS 3.385 barrier, which reduced the trade to NIS 3.31," a dealer in a forex trading room said. "In trade today NIS 3.3 for the dollar was seen as a support level and NIS 3.36 as the resistance level. The trading volumes are very brisk." The market is waiting for Bank of Israel Governor Stanley Fischer to make a pronouncement regarding a rise in interest rates, in light of the 1.5% rise in the April Consumer Price Index. That unexpected figure is sowing inflationary fears locally. The head of interest trading at Bank Hapoalim, Michal Rotlevy, said: "The decline in the exchange rate from 5 shekels to the price today was steady, almost without corrections. The trend is expected to continue for a few reasons: In addition to the high CPI, there are the expectations of a hike in interest rates, which boosts the shekel. The peace moves toward Syria strengthen the shekel, and internationally the dollar is softening." "The current inflation will remain for some time," Rotlevy continued. "The Bank of Israel must understand that now is not the time to strangle the economy. The bank raises interest rates - and chokes shekel liquidity out of the market. In effect, this raises interest rates in the market even without Fischer officially raising the rate." Related articles: Market Report / TA-25 beats trend to rise 0.2% for week April inflation topples dollar Dollar falls as Fischer says won't intervene in currency market Bookmark to del.icio.us   Jet error Israeli warplanes come close to shooting down Tony Blair's plane. Rehab (live) Report: Singer Amy Winehouse is to undergo drug rehab in Israel.   1.   Starbord is raising... 11:03  |  Ulf 24/05/08

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