Bank of Israel announced changes intended to refine foreign currency trade today. The central change will be the daily calculation method of the representative exchange rate.
In the framework of these changes, beginning Monday July 8, Bank of Israel will calculate the representative rate at some point between 14:15 and 15:15 on Mon-Thurs, and between 11:15-12:15 on Fridays and holiday eves.
Until now, representative rates were calculated according to an average rate of dollar commerce in inter-bank trade and cross rates of each currency against the dollar abroad. Representative exchange rates are currently determined close to 15:00 on Mon-Thurs and close to 12:00 on Fridays and holiday eves. The change in the calculation time is intended to lessen the intensity of commerce around the calculation time.
Another change which will take effect is on-going publication of all the representative exchange rates on Reuters' screens. An information screen will be presented hourly on the Reuters' information screens, featuring the shekel exchange rates against the currency basket currencies. The rates will be calculated according to the accepted method for calculating the representative exchange rate.
Bank of Israel emphasized that the new publication will provide information on rates in inter-bank trading throughout the day and not just at the time of calculation of the representative rate. This change will allow the calculation of average rates throughout the day as needed. The public will be able to use these rates in foreign currency-linked transactions during the day, including repayment of linked assets such as options, future transactions in foreign currency-linked deposits, according to prior agreement with the banks.