Shekel Gains on Dollar as Bank of Israel Maintains Interest Rates

The central bank of Israel left its main interest rate unchanged, surprising Forex market participants. This allowed the Israeli New Shekel to rise against the US dollar today, though the currency retreated against the euro.
The Bank of Israel announced yesterday that it leaves its main interest rate at 0.75 percent. The bank commented on the decision:

The decision to keep the interest rate for June 2014 unchanged at 0.75 percent is consistent with the Bank of Israel’s monetary policy, which is intended to entrench the inflation rate within the price stability target of 1–3 percent a year over the next twelve months, and to support growth while maintaining financial stability. The path of the interest rate in the future depends on developments in the inflation environment, growth in Israel and in the global economy, the monetary policies of major central banks, and developments in the exchange rate of the shekel.

It was a surprise to analysts, most of whom were anticipating an interest rate cut.
There were some good developments in Israel, even though it was expected that the nation’s economic growth will slow. The unemployment rate fell by 0.1 percentage point to 5.6 percent in April, according to the report of the Central Bureau of Statistics.
USD/ILS fell from 3.4785 to 3.4760 before trading at 3.4783 as of 1:48 GMT today. EUR/ILS went up from 4.7467 to 4.7518.

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