(IsraelNN.com) Israel's Gross Domestic Product (GDP) grew by an annualized 5.4% in the first quarter, as the dollar continues to fall against the shekel, which is now an internationally recognized currency.

The 5.4% GDP jump is a slightly lower rate than in the two previous quarters, but higher than government forecasts. The Central Bureau of Statistics further reported this week that business product rose by 6.1% in the first quarter of this year, compared with 7.6% and 7.3% in last year's 4th and 3rd quarters, respectively.

The results negate the pessimistic forecasts of 4.3% GDP growth by the Ministry of Finance and 3.2% by the Bank of Israel.

Israeli Shekel Recognized by World
Meanwhile, as of this week, the Israeli shekel has become legal tender internationally, now that Israel has been made an official member of the international CLS (continuous linked settlement) clearing system. Israeli shekels can now be used in trading on markets overseas, banks the world over can convert shekels into other currencies, and Israeli companies and firms can settle payments in shekels either by check or bank transfer to their customers' overseas accounts.

The CLS announcement said, "Following regulatory approval, the Mexican peso and Israeli shekel have been designated as CLS Bank Settlement Eligible Currencies by the CLS Bank Board of Directors. The extension of the CLS Bank service to these currencies enhances systemic stability in the settlement of foreign exchange transactions, and over half of all CLS Bank Members will be able to settle in these two currencies immediately."

Bank of Israel Governor Stanley Fischer said the decision "is a significant further step in Israel’s increasing integration into the global economy. By reducing settlement risk in FX [foreign exchange] transactions, vital to Israel’s open economy, it reinforces the stability and efficiency of Israel’s banks and financial system, and benefits the entire economy."

Several countries and companies already honor the shekel, Globes reports, but the CLS announcement gives an international symbolic stamp of approval to the Israeli currency, recognizing it as one of the strongest currencies in the world.

Shekel Shoots Up, Dollar Dwindles
In fact, the shekel continues to strengthen against the euro and particularly the dollar.  The dollar traded briefly at less than 3.3 shekels this morning, lower than it has been in almost 11 and a half years.  The euro exchange rate now stands at 5.24 shekels, compared with 5.53 two months ago.

Awaiting Interest Rate Announcement
The shekel is expected to continue to increase following Fischer's announcement this evening (Monday) regarding the interest rate.  Most analysts expect him to raise it, after having lowered it or kept it unchanged the past three months.