GB: Shekel stable after Bank of Israel keeps 0.1% rate
The Israeli currency weakened against the dollar Friday morning but was stronger in afternoon trading.
The shekel remained stable after the Bank of Israel Monetary Committee decided Thursday afternoon to keep the interest rate for October unchanged at 0.1%. Many analysts had expected the rate to be cut to zero.
On Friday morning, following the interest rate call, the shekel weakened against the dollar and strengthened against the euro. The Bank of Israel set the shekel-dollar representative rate up 0.203% from Thursday's rate at NIS 3.949/$, and the representative shekel-euro rate was set down 0.699%, at NIS 4.401/€.
After the representative rate was set, the shekel strengthened against the dollar and against the euro in afternoon inter-bank trading, with the rate down 0.59% to NIS 3.926/$ and down 0.50% against the euro to NIS 4.379/€. Over the past week, in which there was no foreign currency trading on Tuesday and Wednesday during the Yom Kippur holiday, the shekel weakened 2% against the dollar but strengthened by 1% against the euro.
Yesterday, in explaining the Monetary Committee's interest rate decision, Bank of Israel Governor Karnit Flug said that the Israeli economic picture had worsened faster than expected. The Bank of Israel Research Department cut its growth forecast for 2015 by 0.4% points, to 2.6%, and by 0.4% points for 2016, to 3.3%.
The Bank of Israel expected the interest rate to remain unchanged in 2015 and rise by 0.5% in 2016 to 0.6%. Previously the Bank of Israel had predicted an interest rate of 1.25% at the end of 2016.
