US dollar plummets below NIS 4.00

New Israeli Shekel hits seven-year high; dollar closes Monday at NIS 3.998.

jp.services1 (photo credit: )
(photo credit: )
The US dollar dropped below the four-shekel mark on Monday for the first time in seven years, closing at NIS 3.998. At the end of April, the dollar teetered on the edge of NIS 4.00, with analysts predicting it might go lower. In a recent report, Morgan Stanley argued that Israel's strong macroeconomic data and structural shifts in the balance of payments had been the main parameters driving the shekel's continued sharp advance, more so than the dollar weakness around the world. Similarly, the Bank of Israel has been stressing that the current account surplus widening to $6.8 billion and foreign investment reaching a record of $21.2b. have been supporting the shekel in recent months. Since October last year, the Bank of Israel has been cutting interest rates, but the cuts have not succeeded in weakening the currency. The Central Bank would like to see the shekel weaker against the dollar, as a low dollar keeps inflation under the government's target range, which is between 1% to 3%. Last year, the Central Bank missed that target widely, when inflation ran at minus 0.1% and this year the Central Bank was planning to bring inflation back into the price target range by last quarter. Sharon Wrobel contributed to this report.