BoI Less Hawkish But Further Hikes Possible

The Israeli shekel has bounced off weekly trendline support on the back of a 25bps rate hike, which took the lending rate to 4.00% yesterday, indicating that our bullish view on the currency may be back in play. We look for renewed dollar weakness, a US Fed rate cut - we continue to forecast a Fed Funds rate of 1.50% for end-2008 - or a positive economic surprise from Israel as potential triggers. On the technical side, a push back through ILS3.40/US$ would be a positive sign. However, the Bank of Israel (BoI) is clearly concerned about currency strength, having

To read the full article, please choose one of the following options: