Bank of Israel Market Operations Department director Barry Topf, the man responsible for buying dollars by the central bank, today told the Knesset Finance Committee that there were no restrictions on the amount of dollars that the Bank of Israel could buy. The Bank of Israel has bought $40 billion since March 2008.
"I thank you for the opportunity to explain the Bank of Israel's policy. The more we can explain it, the more we're understood," said Topf in his opening remarks.
The Bank of Israel has generally declined to comment on almost every detail about its foreign currency policy, including the criteria for intervening in the foreign currency market, the criteria for setting the amount of purchases, the size of its foreign currency reserves, which reached $66 billion at the end of September, and where the reserves are invested.
Topf said, "There are no restrictions on our purchases, at least theoretically. There are considerations, but there are no restrictions. We must take into account costs and complications, but technically, there are no limits." Later he added, "There are disagreements with the Ministry of Finance on these matters."
Topf said that accepted current international policy called for foreign currency reserves to cover a country's total external short-term debt. He presented figures that showed that until 2008, the Bank of Israel's pace of dollar purchases was much slower compared with OECD countries. He also noted that the extreme and inexplicable fluctuations in the foreign currency market were a reason for intervening in the market.
Published by Globes [online], Israel business news - www.globes-online.com - on November 2, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010