The shekel is surging in dull shekel-dollar trade, say dealers. At a nominal interest rate of 9.1% on the shekel, the dollar has lost its allure, they say.

The options price the dollar at NIS 4.638, compared with its representative rate of Friday, which was NIS 4.668.

Trading volumes are thin, with 16,000 contracts having changed hands by 14:15 Sunday.

The currency market is closed on Sunday, but the shekel-dollar options trade can portend the trend when it reopens on Monday.

Currency dealers say that the high interest on the shekel, 9.1%, significantly reduced the attractions of the greenback, which has meanwhile been taking a beating in world markets. "Anybody holding dollars is losing a mint each day, even if the dollar's exchange rate stays firm," said one dealer.

He predicted that the dollar would continue to hover between NIS 4.6 to NIS 4.7.

Sources at the Meitav investment house expect the dollar to trade between NIS 4.64 to NIS 4.70, barring unexpected developments. Extreme fluctuations on Wall Street or negative developments on the diplomatic front could change that prediction, they added.

The gap between shekel and dollar interest rates remove any desire for speculative actions, Meitav sources added. The gap will probably narrow later in the year, they said, adding that the 2003 budget cut also supports the shekel.