Assuming market conditions and the interest remain unchanged, the dollar could climb as high as NIS 4.8, estimates the manager of Bank Leumi's dealing room.

"The foreign currency market has good liquidity, and the rise in the dollar follows public demand through foreign currency funds and dollar-linked savings accounts," he says. "The dollar rise is recursive. The public gets 1% to 1.5% interest on its shekel deposits, so it thinks twice before making any investments."

According to the manager, in spite of the market¿s current liquidity, too large demand could render it helpless. "I believe a $100 million to $200 million transaction could make the market lose its liquidity," he said. Such a deal, he asserts, may lead to an immediate 1% devaluation. The foreign exchange market is functioning well for the time being since the banks, particularly the major ones, provide it with the necessary liquidity.

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