"The present policy provided a good response to the situation," Bank of Israel Market Operations Department director Barry Topf told a special session of the Knesset Finance Committee today. The committee met to discuss the ramifications of the exchange rate on exports. The Bank of Israel yesterday terminated its dollar purchasing program.
Topf also laid some groundwork for a long-term appreciation of the shekel, saying, "There is no choice that hedging against changes in the exchange rate in the long term are in the hands of exporters. There is no other way to succeed in the long term. Different industries have already shown that they know how to cope. We cannot be a permanent fixture in the market."
Topf added, "It's hard to imagine the damage to the economy were it not for the Bank of Israel's intervention. The Bank of Israel will act in the event of extreme volatility or irregular functioning or market failure. This policy has no time limit,"
Topf implemented Fischer's dollar and government bond purchasing policies. Topf added, "The foreign currency market does not always function optimally, and not always for the good of the economy. Therefore, it has been necessary for the Bank of Israel to undertake various measures to deal with this. Since the Bank of Israel's intervention in the market, the shekel has appreciated 20% against the dollar."
Published by Globes [online], Israel business news - www.globes-online.com - on August 11, 2009
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