Dollar drops to NIS 4.62 Sunday morning

Dollar options are trading down to NIS 4.62 Sunday morning, 0.2% below than the Friday representative exchange rate, NIS 4.6310.

The Friday rate was set before the publication of the consumer price index for January, which rose 1.1%, more than expected. After the publication of the CPI, the dollar dropped to NIS 4.60.

The weakening of the dollar is related to foreign currency market estimates that Bank of Israel Governor David Klein will raise key lending rates by 0.5% next Monday in order to avoid inflationary pressure.

Ilanot Batucha's Gift Currency Management economists noted there are many other reasons for the inflationary trend continuing other than the high CPI and the monetary response of the central bank. The economists mentioned the further escalation in the fighting between Israel and the Palestinians, and the problematic budget for 2002.

The economists estimate that following the high CPI, the market will examine the dollar's technical support level at NIS 4.60, and the important technical support level of NIS 4.57. According to the technical analysis, NIS 4.65 forms a significant resistance level.

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