The government decided Wednesday to link the Shekel to a basket of currencies of its major international trading partners instead of solely to the U.S. Dollar, the current alignment. The objective of the new linkage is to reduce the inflationary impact of the ongoing rise in the non-Dollar currencies.
The Dollar will comprise 60 percent of the new basket of currencies, while the German Mark will comprise 20 percent, the British Pound Sterling 10 percent, and the French Franc and the Japanese Yen each constituting 10 percent of the basket.
Israel hopes that the new alignment will bring inflation down to below 10 percent a year, as inflation has been partially caused by the Shekel falling against the non-Dollar currencies.
According to economic observers in Jerusalem, the new linkage reflects faith in the stability of the Shekel achieved by the government’s current economic program.
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