In the face of the continuing strength of the shekel against the dollar, the Bank of Israel announced today that it is making its foreign currency policy more flexible. The implication is that in addition to buying its current $100 million per day ($50 million on Fridays), it will at times buy more in order to strengthen the dollar relative to the shekel.
Sources inform "Globes" that the Bank of Israel already implemented its new policy today by purchasing more than $100 million to halt the slide of the dollar.
The Bank of Israel set the shekel-dollar representative exchange rate today at NIS 3.743/$, 1.24% lower than the day before. However, the dollar recovered these losses in evening trading. The shekel weakened against the euro today by 0.16% to NIS 5.356/€.
The Bank of Israel said today, "From now on the Bank of Israel will act in the foreign exchange market when there are extraordinary movements in the exchange rate, which do not fit in with the basic economic conditions or when the foreign currency market is not appropriate. The Bank of Israel continues its dollar purchase policy of $100 million."
In other words the Bank of Israel is saying that if the dollar or other currencies drop sharply it will intervene to stem the fall.
Published by Globes [online], Israel business news - www.globes-online.com - on August 3, 2009
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