Shekel weakens as BoI buys foreign currency

Shekel  / Photo: Shutterstock
Shekel / Photo: Shutterstock

The Bank of Israel bought $1.6 billion in foreign currency in October and November and is continuing purchases this month.

The shekel is weakening today against the dollar and against the euro after the Bank of Israel once again intervened on the forex market yesterday to make substantial foreign currency purchases. In early afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.31% against the dollar at NIS 3.476/$ and up 0.39% against the euro at 3.853/€.

Yesterday, the Bank of Israel set the representative shekel-dollar rate down 0.173% from Monday at NIS 3.465/$, and the representative shekel-euro rate was set 0.130% lower, at NIS 3.838/€.

The Bank of Israel continues to stem the strengthening of the shekel and assist exporters by buying large amounts of foreign currency. This was a policy that new Governor Prof. Amir Yaron was reluctant to pursue when he took office last December and until the past few months, he was reluctant to sanction forex intervention and preferred to let market forces prevail. But in October the Bank of Israel bought $314 million in foreign currency and in November purchases rose to $1.268 billion. These purchases have continued into December, including yesterday, and it now seems that Yaron has fully embraced the concept of foreign exchange market intervention, as an instrument for weakening the Israeli currency.

The Bank of Israel is concerned that the strengthening shekel is preventing inflation from rising to its annual target of between 1% and 3%.

Published by Globes, Israel business news - en.globes.co.il - on December 11, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Shekel  / Photo: Shutterstock
Shekel / Photo: Shutterstock
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