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Israel Devalues Shekel by 1.5%

Israel devalued the shekel by 1.5 percent Monday, amid heavy demand for foreign currency in the business sector.

The devaluation resulted in a new rate of 3.1 shekels to the dollar.

The strong demand for foreign currency came as concerns exist about possible cuts in the state budget by the new government being formed at Acting Prime Minister Shimon Peres.

The cuts could lead to a drop in interest rates and a consequent shekel devaluation of 3 percent to 4 percent against the dollar.