Market loses faith in shekel

Prime Minister Ariel Sharon tried to calm the markets yesterday as the dollar crept ever nearer to a new high of NIS 5. "I believe in the Israeli economy," he said, "Israel has a healthy economy but we are temporarily in a setback. I trust the shekel, I believe in it."

The representative rate for the dollar, which is taken at around noon each day, was set at NIS 4.968 yesterday, a 0.5 percent weakening of the shekel on the day. What lies behind it all?

To announce a sharp 1 percent rise in the rate of borrowing, central bank governor David Klein called a news conference to explain why, despite the difficult economic times, he had to raise the interest rate. This will impact, not least, on those with overdrafts and mortgages.