For the first time this secular year, the dollar flirted with
the 4.00 barrier as it fell 0.55 percent against the shekel
on Monday and the representative rate was fixed at NIS 4.001,
the lowest level since more than a year ago in October 1998
during the financial turmoil in the last quarter of that
year. Currency dealers said that in the course of the trading
day the dollar even fell below NIS 4.
The consensus opinion is that the strong shekel is the result
of foreign investment on the Tel Aviv stock exchange and in
Israeli hi-tech companies. The inflow of dollars depresses
the price because of the increased supply.
Economists said the recent rise of the shekel is expected to
contribute to lower inflation, which will probably be below
the official target set by the government of 3%-4% for the
year.
If the dollar falls below 3.8144 the Bank of Israel must
intervene to support it according to its declared policy.
That is the lower limit of the band within it is allowed to
fluctuate.
Since the beginning of January, the dollar has fallen 3.7%.
It is now 8.5% below its peak, which was registered in
November 1998.
The foreign currency "basket" that reflects Israel's foreign
trade is also trading near its lower limit.
