5.50%

6.00 %

7.50 %

9.00%

Interest Rate
Last 6 Months

Heightened Interest

Bank of Israel's dilemma:
Higher or lower rates?

Interest Rate
Next 6 Months

PINHAS LANDAU SPECIAL TO THE JEWISH NEWS

Interest Rate
Next 6 Months

O

Interest Rate
First 6 Months

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For personal accounts only. Huntington Personal Banked and Huntington Direct ," are Federally registered service marks of Huntington Bancshares Incorporated.
© 1995 Huntington Bancshares Incorporated.

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TAX-DEFERRED ANNUITIES

IRA'S MONEY MANAGEMENT

ne of the key signs of the
growing sophistication of
Israel's financial markets
is the rise of what might be
termed "Bofiswatchers."
In the same way as the ana-
lysts who track how the Federal
Reserve Bank makes monetary
policy are "Fedwatchers," and the
Bundesbank analysts are
"Bubawatchers," the people who
try and figure out what the Bank
of Israel is going to do next must
be "Bofiswatchers."
The raw material for these sa-
vants is economic data such as in-
flation, unemployment and trade
figures, as well as the more ar-
cane money-supply numbers.
Each piece of data is scruti-
nized in light of current central-
bank policy and thinking: Will it
confirm or contradict the pro-
claimed aims of the policy mak-
ers?
Ultimately, the object is to try
and second-guess the central
bank's decision on interest rates
because correctly predicting the
direction of interest rates, and es-
pecially the timing of changes in
rates, is the Holy Grail of eco-
nomic analysts in every capital
market in the world, at least in
the last few years.
Recent figures for the Israeli
economy have not been encour-
aging, to say the least. Although
January's consumer price index
was a lowly 0.2 percent, this re-
flected the collapse of fresh veg-
etable prices after their explosion

late last year.
The underlying rate of con-
sumer price rises was still around
1 percent. Worse still, wholesale
prices of Israeli products jumped
1.4 percent in January, suggest-
ing that inflationary pressures
are getting worse, not better.
But the obsession with infla-
tion numbers is an aberration.
The really bad news came a
week earlier with the publication
of the January trade figures,
which showed a deficit of $1 bil-
lion.
Although this number elicited
almost no response, its severity
can hardly be understated.
Remember that regular U.S.
aid, plus assorted forms of Dias-
pora support, plus borrowing $2
billion a year under the U.S. loan
guarantees give Israel a total of
less than $6 billion per annum.
In other words, there is no way
Israel can even pretend to finance
a trade deficit of a billion dollars

The trade deficit
suggests Israeli
currency is
overvalued.

a month without massive foreign
borrowing — assuming the world
is ready to lend Israel the differ-
ence. The trade deficit suggests

LEADING ISRAELI STOCKS
TRADED ON U.S. EXCHANGES

Symbol

Name

Exchange

Jan. 20

Jan. 27

Change

SCIXF

Scitex

NASDAQ

'17.38

'17.38

'0.00

ECILF

EC I Telecom

NASDAQ

'15.88

'15.50

TEVIY

Teva Pharm

NASDAQ

'26.63

'25.75

I EC

PEC Israel

NYSE

'24.38

'22.13

ELBTF

Elbit Computers

NASDAQ

'19.50

'17.75

ELT

Elscint LTD

NYSE

'1.88

'2.00

ELRNF

Elron Electronics

NASDAQ

`9.75

'8.63

TAD

Tad iran

NYSE

'16.50

'15.75

CMVT

Comverse

NASDAQ

'12.75

'11.88

LANTF

Lannet Data

NASDAQ

'22.75

'21.50

ISL

First Israel Fund NYSE

'10.88

'9.88

Source: Allen Olender, Prudential Securities,
West Bloomfield.