Missiles? What Missiles? Shekel Outlook Still Bright

It says something when a country's currency rises to a new 11 ½-year high on the same day a hostile rogue state tests out missiles designed to reach its territory. The development reinforces our bullish stance towards the Israeli shekel, which has now hit our end-2008 forecast of ILS3.20/US$. We are still targeting a rate of ILS3.00/US$, although we note that a dollar bounce, when it eventually happens, will cause some retracement. Hence we are leaving our end-year forecasts unchanged. As far as the politics is concerned, we think an Israeli strike on Iran would be a big gamble. Retaliation

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