Bethel Finance news:
The shekel dollar exchange rate was set down 0.55% at lunch time at NIS 3.405/$, while the euro rose sharply by 0.84% to NIS 4.983/€. After the exchange rate was set, the shekel continued to strengthen and the dollar went below the important psychological threshold of NIS 3.4/$ for the first time in more than 30 months. In the early afternoon the rate was down a further 0.16% at NIS 3.399/$.
On global markets, the major currencies were stable with the dollar fractionally weaker against the euro at $1.457/€.
On Sunday, Bank of Israel Governor Prof. Stanley Fischer will announce the interest rate for May and market sentiment is divided over whether he will keep the rate unchanged or raise it by 25 basis points to 3.25%. Last month Fischer raised the rate by 0.5%.
Clal Finance believes that Israel's strong macroeconomic performance, which indicates continued economic growth, supports a further rise in the interest rate. However, Clal Finance does not think that the Bank of Israel will raise the interest rate on Sunday because any interest rate rise in the US has been put off, and because of the strengthening of the shekel.
Furthermore, inflationary expectations have fallen over the past month to 3.3% from 3.7%, though they are still above the government's annual target range of 1-3%.
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