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Dollar hops over NIS 4.6 hurdle, waits for interest rate

Escalating violence stopped early morning shekel gains

Trading in this week¿s foreign currency market opened in the shadow of yesterday¿s suicide bombing in Jerusalem and this morning¿s shooting attack in Bnei Brak. At the start of trading, the shekel managed to gain a little on the dollar to trade at NIS 4.5850.

The turnaround was quick in coming, however, and the dollar quickly climbed over the NIS 4.6 psychological hurdle. Greenbacks are now trading at NIS 4.6050, up 0.2% on yesterday's representative exchange rate.

Trading rooms reported the dollar's early slide was due to local banks selling goods, but the political events curtailed the slide. One trader told TheMarker "The market wants to take profits and that was clear yesterday during options trading as well." He said sellers were not so quick to act as violence escalates, while buyers were waiting to exploit profit taking.

Bank of Israel governor David Klein will announce the February interest rate today. He is expected to leave the rate unchanged at 3.8%. Klein has recently stated that the central bank is interested in maintaining price stability. Inflation expectations are currently 2.5%, the middle of the government¿s inflation target for 2002.

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