Aug. 26 (Bloomberg) -- Israel’s shekel headed for the weakest level in almost seven weeks as the central bank held interest rates steady for a third month.
The shekel depreciated 0.5 percent to 3.6064 a dollar, the lowest on a closing basis since July 10, at 5:36 p.m. in Tel Aviv. One-year interest-rate swaps, an indicator of investor expectations for rates over the period, fell six basis points to 1.25 percent.
The Bank of Israel, led by acting Governor Karnit Flug, left borrowing costs at 1.25 percent, matching the forecast of all 22 analysts surveyed by Bloomberg. In May, the regulator sought to temper shekel gains, which hurt exporters, by cutting rates twice from 1.75 percent and announcing a program to buy foreign currency.
“The weakening of the currency and recent sound economic growth data supports the consensus that the central bank won’t need to lower interest rates today,” Rony Gitlin, head of spot trading at Bank Leumi Le-Israel in Tel Aviv said before the rate decision.
Israel relies on exports, including to the U.S., for 40 percent of gross domestic product. The nation’s economy expanded an annualized 5.1 percent in the three months through June from a revised 2.7 percent in the first quarter, the statistics bureau said Aug. 18.
The shekel has declined 1.2 percent so far this month, trimming this year’s advance to 3.5 percent, the best performer among 31 major currencies tracked by Bloomberg.
Growth is forecast to expand in 2014 to 3.5 percent from 3.2 percent this year, according to the median estimate of six economists in a Bloomberg survey. The yield on the benchmark 4.25 percent notes due March 2023 fell one basis point to 3.97 percent.
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