"It is not certain that Stanley Fischer knows himself how long the Bank of Israel's intervention to strengthen the dollar will continue; there is no clear deadline at the moment to end this policy," Minister of Finance Yuval Steinitz told Israeli correspondents in Washington yesterday.
Last week, Prof. Avi Ben-Bassat told "Globes" that Governor of the Bank of Israel Prof. Stanley Fischer "cannot change the value of the dollar in the long term; that's not reasonable."
Steinitz said in response, "I admire Ben-Bassat, who is one of Israel's most important economists. Fischer said himself that there's a limit to what the Bank of Israel can achieve against the dollar. It's hard for me to assess for how long the Bank of Israel can maintain its policy of buying large quantities of dollars."
Steinitz slammed the recent wave of accusations in Israel that there is a threat of speculators attacking the shekel. "We haven’t seen any sign of such an attack by speculators," he said. "It's hard to define speculator. Is carrying out a financial transaction to reap short-term fruits speculative behavior? Is hedging speculative behavior? In the short term, speculators move the market. Everyone remembers the famous attack by George Soros on the pound. That certainly is not happening now in the Israeli market."
Steinitz claimed that special interests were trying to create a buzz about a speculators' attack on the shekel. However, the market reality belies the allegations. "The shekel hasn’t strengthened; it's the dollar which has weakened. It's impossible to take the shekel out of the global context. Most of the world's currencies are behaving in the same was as the shekel against the dollar. If we were to see extraordinary movement in the shekel there might be room for concern, but the shekel is behaving the same as all the world's currencies."
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2009
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