Despite the fact that the Bank of Israel has discontinued its dollar purchasing steps, the Israeli shekel has strengthened against the dollar and the euro in early inter-bank trading today. The shekel-dollar exchange rate declined by 0.86% to NIS 3.824/$ and shekel-euro exchange rate slipped by 0.03% to NIS 5.457/€.



Yesterday, the Federal Reserve Board Chairman Ben S. Bernanke kept the Fed interest rate unchanged at 0-0.25%, and last week the European Central Bank sustained the euro rate at 1%.



Governor of the Bank of Israel Prof. Stanley Fischer is endeavoring to keep the shekel-dollar exchange rate at a high level, and is working to keep the interest rate at 0.5%. Any interest rate hike would widen the differential with the Fed interest rate, which would temporarily weaken the shekel against the dollar.



The Central Bureau of Statistics will publish the Consumer Price Index (CPI) for July tomorrow. According to analysts, the index is expected to rise by 0.7-1%, mainly because of the VAT hike that came into effect on July first.