Shekel Firmer Against U.S. Dollar

The strengthening of the shekel against the dollar continued Thursday, as the U.S. currency continued to weaken all day. The representative rate was set by the Bank of Israel at NIS 4.826, a drop of more than 1.1 percent compared to Wednesday's rate.

The main reason for the continued strengthening of the shekel lies in the steep increase in interest rates, which led to a 7 percent difference between the shekel interest rate and dollar interest rate.

In light of the relative calm on the world's financial markets, and the lowering of inflation expectations, investors believe that they would earn a better yield from shekel-based investments, with a lower risk level than could have been expected several days ago.

An additional factor affecting shekel trading against the dollar is the weakening of the U.S. currency against other currencies. On Wednesday, as a result of the latest corporate scandal in the United States, the dollar weakened by 1 percent against the Euro, with the rate reaching 0.99 Euro to the dollar. The two currencies (dollar and Euro), are now very close to parity.

The Israeli currency lost 0.8 percent Wednesday, compared to the Euro, and the representative rate was set at NIS 4.842.