The shekel is strengthening today against the dollar and against the euro. In early afternoon inter-bank trading, the shekel-dollar exchange rate is down 0.52% against the dollar at NIS 3.620/$ and down 0.82% against the euro at 4.172/€, Globes reports.
Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.137% from Tuesday's exchange rate at NIS 3.639/$ and set the shekel-euro rate down 0.076% at 4.206/€.
The shekel is stronger against the dollar for the second successive day even though the dollar is buoyant on world markets and has moved back to 11-month highs against the basket of the world's major currencies. With annual GDP growth of over 4% and generally strong macroeconomic data, the dollar in its recent rally was never going to be able to push the Israeli currency much above the NIS 3.60-3.65/$ range, market sources in Tel Aviv believe.
There is also growing confidence that the Bank of Israel will be able to raise interest rates above the historic low of 0.1% in the final quarter of the year, now that inflation has risen to 0.8% over the past 12 months - very close to the government's annual target range of 1%-3%.