Bank of Israel buys NIS 600m worth of corporate bonds

Amir Yaron  / Photo: Rafi Kotz, Globes

The corporate bond purchasing program started in July. The bank's foreign currency reserves top $150 billion.

The foreign currency reserves managed by the Bank of Israel rose by more than $10 billion in July, crossing the $150 billion threshold for the first time. According to the central bank's announcement today, Israel's foreign currency reserves at the end of the month stood at $157.662 billion, representing 39.3% of Israel's gross domestic product.

The growth in the foreign currency reserves mainly stems from the strengthening of the euro against the US dollar and from repayment of short-term loans that the bank granted to the private sector at the start of the coronavirus crisis. At that time, because of a severe dollar squeeze, the central bank introduced swap deals enabling financial institutions to buy dollars from it. The bank allocated a total of $7.5 billion to the program, which was entirely repaid by the end of July.

The Bank of Israel says that it bought a fairly modest amount of foreign currency in July, a total of $810 million, despite the low shekel-dollar exchange rate. Mopping up short-term dollar credit from the financial system added a further $4.5 billion, and revaluation of foreign currency reserves added another $3.7 billion. Foreign currency debt raising by the Israeli government contribute a further $1.1 billion to the reserves in July.

In a separate announcement, the Bank of Israel said that during July it bought corporate bonds to the tune of NIS 600 million, and government bonds to the tune of NIS 500 million. The program of corporate bond purchases launched at the beginning of July had a noticeable impact on the market. Purchases of government bonds started in late March, and the central bank's holdings have reached NIS 2.39 billion.

Published by Globes, Israel business news - en.globes.co.il - on August 6, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Amir Yaron  / Photo: Rafi Kotz, Globes
Amir Yaron / Photo: Rafi Kotz, Globes
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