Maof up 3.9%, shekel up against dollar after interest rate hike
Trading on the Tel Aviv Stock Exchange made sharp increases Tuesday and the shekel strengthened against the dollar in response to Bank of Israel Governor David Klein's announcement a day earlier that he was raising interest rates by two percentage points, the third such move in the past month.
The Maof index rose 3.9 percent to 363 points, the Tel Aviv 75 inex gained 2 percent, and turnover on the stock exchange was NIS 250 million.
Leumi and Hapoalim stocks increased by five percent each, respectively, while Discount stocks increased by 6.7 percent. Bezeq stocks rose 4.5 percent.
Banks were trading the dollar at NIS 4.89 in the late afternoon and the Bank of Israel set the representative trade rate for the dollar at NIS 4.919.
Monday's interest rate hike means that from Thursday, July's nominal interest rate will stand at 9.1 percent.
The Bank of Israel explained the hike by pointing to the country's rising inflation and called on the government to take steps to stabilize the financial markets.
Before his announcement Klein met Finance Minister Silvan Shalom for about an hour at the minister's Jerusalem office. Both men remained tight-lipped about the meeting and refused to pose for pictures before or afterward.
Klein has raised interest three times in one month by a total of 4.5 percentage points. The last time the interest rate was 9.1 percent was in July 2000.
The central bank said the new rise would be for the short term and was meant to bring inflation back to a point where prices would stabilize - around 1-3 percent.