The demand for the dollar is growing, causing further devaluation of the shekel. The dollar is now up to NIS 4.385, 1.1% higher than its Monday representative rate.

This completes a 3.5% rise for the dollar, or a 15% climb, since first reports of the interest rate cut. Various financial sources estimate the dollar will not continue this sharp rise, and will trade at NIS 4.35 to NIS 4.45 levels in the short term.

Excellence Investments reports volatile dollar trading today, with the dollar opening at NIS 4.38, slipping some later on to NIS 4.365, and climbing back above NIS 4.38. Excellence explains that business concerns now converting their dollars, it being the end of the month, are "battling" with the dollar funds, which yesterday raised an estimated $200 million.

The dollar rose to its current level two days ago, after the representative rate was set at NIS 4.335. The relatively low rate resulted from the expiry of the dollar options, which pressed the rate down.

Most dealing rooms in banks were closed yesterday due to the Christmas holiday, and the only indication of the value of the dollar was the trade in dollar options. Its value in the context of the options reached NIS 4.39, later closing at NIS 4.38. Dealers indicated it strengthened due to lack of liquidity.

Foreign currency-based funds are estimated to have raised NIS 500 million in the last few days. Dealers predict that continued influx to these funds will suport creeping shekel devaluation. Though banks are not sensing public panic, the diminishing yield on the shekel is leading many to invest in dollar-based instruments.