Skepticism over effect of abolishing representative rates

Economists and analysts were skeptical about the impact of abolishing the dollar-shekel representative exchange rate set daily by the Bank of Israel. "I don't think the measure would make a difference or solve much," said Amir Hayek, chief economist at Union Bank, reacting to comments from Bank of Israel Governor Stanley Fischer on Wednesday that the central bank was considering eliminating it because it encouraged the setting of prices, such as for apartments, in dollars, which wasn't good for the economy. "If the public wants to link apartment or rent prices to the dollar it can do so without Fischer," said Hayek. "The public could always find other ways, for example, by linking dollar prices to a bank's cash purchase dollar rate, or the selling rate or an average of the two." Yoav Nardi, alternate managing director and head of the capital markets and investments division at Bank of Jerusalem, however, was more optimistic about the possible impact. "The measure could be a catalyst for ending the use of dollar-linked prices as a benchmark in making deals and transactions and in turn the exchange rate would have less of an impact on the Israeli economy," he said.