The Bank of Israel has again intervened in the foreign currency market. After the shekel strengthened to very close to the NIS 3.70/$ level in inter-bank trading, Bank of Israel Governor Prof. Stanley Fischer began buying dollars at about 1pm. Market sources estimate that the Bank of Israel purchased $350 million. $100 million in a first wave just after 1pm, $150 million later in the afternoon and a final $100 million before the representative rate was fixed at NIS 3.718/$
Prior to the intervention, the shekel had risen 0.2% from yesterday's representative rate to NIS 3.703/$. The shekel, which was weakening against the shekel even before the intervention is down 0.4% to NIS 5.543/€. On world markets the dollar is stable against the euro at $1.492/€.
Today's intervention seems to contradict the Bank of Israel's statement two months ago that it would only intervene in the foreign currency market when there were "extraordinary fluctuations." There were no extraordinary developments today with relatively low trading volumes and a thing trading band.
Market experts suggest that Fischer simply wants to support the dollar against the shekel.
One trader said today, "The market is calm and its good that the Bank of Israel intervenes when the market is tranquil. However, the scope of the intervention is not massive this time."
Published by Globes [online], Israel business news - www.globes-online.com - on October 15, 2009
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