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Dollar options trade steady around NIS 4.595

Tuesday options expiry and central bank's interest rate decision tomorrow will affect trade

Dollar options are trading around NIS 4.595, only slightly lower than the dollar's representative rate set at NIS 4.596 Friday. Trade volume is a low 4,500 options.

The dollar is due to be affected by the announcement of the Governor of the Bank of Israel tomorrow regarding the interest rate, likely to remain unchanged, by the expiry of the January options that may lead to a technical slide in the dollar rate, and by continued negotiations on the budget and budget cuts for this year.

Foreign currency market players are struggling to estimate where the dollar is heading next, though most, including Gift investment house analysts, predict continued shekel devaluation, a possible technical correction to NIS 4.55, but a general direction towards higher levels of NIS 4.62 to NIS 4.65.

Bank Hapoalim analysts predict the devaluation will reach higher levels of NIS 4.6 to NIS 4.7 in the next few weeks. They say the wave will be blocked even without an interest rate hike by the Bank of Israel. The bank expects certain revaluation later on, and another slide in the second half of 2002. Their estimate is interest will rise towards the end of the year, as interest in the U.S. will be expected to rise as well.

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Meitav investment analysts predict this week will be affected by the decision of Governor of the central bank regarding the interest rate, the expiry of the dollar-shekel options and the foreign exchange conversions typical of the end of the month. They say these factors may lead to shekel revaluation, though not for long. They estimate the general direction will be of continued shekel devaluation to NIS 4.7 to NIS 4.8 in the next few weeks. Meitav analysts predict the dollar will this week range from NIS 4.64 to NIS 5.56.