The shekel was weaker in inter-bank trading Tuesday following Monday's surprise announcement by the Central Bureau of Statistics that the Consumer Price Index (CPI) fell 0.3% in July with prices down in six of the ten major categories measured. The shekel dollar exchange rate was up 0.3% to NIS 3.531/$ and the shekel euro exchange rate was up 0.88% to NIS 5.08/€.
In the foreign currency market Monday, the Bank of Israel set the shekel-dollar representative exchange rate down 0.79% at NIS 3.52/$, while the shekel-euro representative exchange rate was set down 0.06% at NIS 5.036/€. Inflation for the past 12 months fell to 3.4%, nearing the top end of the government inflationary target of 1-3%.
As a result of lower inflation some market analysts believed the Bank of Israel would lower the interest rate for September because of the debt crisis in Europe and the US credit rating downgrade last week.