Credit Suisse: BoI purchased $200-300 million yesterday

Foreign banks have begun to react to Bank of Israel Governor Stanley Fischer's new foreign currency purchasing policy. Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ) believes that by the end of September 2009, Fischer will gradually pull back from his daily purchases of foreign currency and wil adopt a tactic of more sporadic purchases of unspecified amounts.

Credit Suisse economists said, "some of the traders on the market reported that the Bank of Israel purchased between $200-300 million yesterday and backed up his actions by yesterday's announcement."

Citigroup Inc. (NYSE: C) economists said, "A growing number of investors convinced themselves that the Bank of Israel's interventionist policies on the foreign exchange market would not last for long because of inflationary pressures. Yet the Bank of Israel's new policy is less transparent. The Bank of Israel is still confronting a dilemma which is not simple because inflation requires a tight monetary policy."

Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2009

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