JERUSALEM, Feb 27 (Reuters) - Israel's shekel ILS= gained 0.6 percent against the dollar on Wednesday in the wake of a global slide in the U.S. currency that took the euro to a an all-time high.
The shekel’s official rate was set at 3.6080 per dollar, compared with Tuesday’s rate of 3.6280.
The bounce in the shekel came after it had slipped 1.3 percent on Tuesday after a surprise half-point reduction Israel’s key lending rate to 3.75 percent, a move that dealers believed would halt a 7 percent rally so far in 2008.
Currencies around the world rose against the dollar following another round of gloomy U.S. economic data and on further expectations of more Federal Reserve rate cuts.
A widening differential between Israeli and U.S. short-term rates to 1.25 percentage points prior to the Bank of Israel’s action had bolstered the shekel in 2008.
But the Bank of Israel made it clear it did not want the differential to widen more, especially since the Fed is forecast to lower rates by a half-point in March. The strength of the shekel against the dollar was hurting exports to the United States.
The shekel remains near a rate of 3.5780 set on Feb. 4, its strongest level since March 1998.
Tel Aviv shares gained dipped 0.4 percent while benchmark 10-year bond prices ILSAHR2683=TA rose 0.1 percent to send its yield down to 5.54 percent yield 5.55 percent. Yields have dropped 10 basis points the last two sessions.
On the crosses, the shekel traded at 3.3929 per 100 yen compared with 3.3636 on Tuesday, against the euro at 5.4275 from 5.3981 shekels and against the pound at 7.1640 from 7.1613.
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ILS= for latest commercial bank shekel/dollar rates.
ILS1= for a list of commercial bank shekel/dollar rates.
ILS2= for a list of commercial bank shekel/basket rates.
BOIT12 for Bank of Israel rates.
FXIL for Israeli spot and mid rates by the hour. (Editing by Ron Askew)