Shekel continues to slide

The Bank of Israel has purchased up to $1.7 billion this week so far.

The shekel continued its slide this morning against the dollar and the euro. In morning inter-bank foreign currency trading, the shekel weakened by 1.3% against the dollar to NIS 3.94/$ and by 0.86% against the euro to NIS 5.66/€.

Over the past few days the Bank of Israel has increased its intervention in foreign currency market in order to weaken the shekel and help exporters, who are an important factor in meeting economic growth targets. The Bank of Israel's action came after the exchange rate plummeted to NIS 3.75/$ earlier this week. At one point yesterday the exchange rate even reached NIS 3.94/$ before the shekel strengthened somewhat.

The Bank of Israel is believed to have purchased between $1.5-1.7 billion this week so far.

Yesterday the Bank of Israel Governor Stanley Fischer told the Knesset Finance Committee, "It is clear that we won't carry on buying foreign currency forever. Everybody understands that the central bank can't beat the market, but sometimes the market does things that are not justified."

Yesterday, the central bank reported that its foreign currency reserves grew to $52 billion in July.

Today the central banks in Europe will publish their latest decisions on interest rate levels. Market sources expect there to be no change from the current interest rate of 1% in Europe and 0.5% in England.

Published by Globes [online], Israel business news - www.globes-online.com - on August 6, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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