"It was important that investors understand the risks involved in activities involving derivative instruments, and that there may be sharp changes in the exchange rate in the direction of depreciation as well, and that they take all this into account in hedging their risks and managing their portfolios," Bank of Israel Governor Prof. Amir Yaron told the Israel Economic Association Conference today.
Yaron recounted the steps taken by the Bank of Israel during the coronavirus and its intervention of the markets. The Bank of Israel intervened following the sharp fall in government bonds and the dollar crunch which cause interest rates on short term two year dollar loans to soar. Among other things, the Bank of Israel allowed Israeli financial institutions to deposit government bonds as securities against short term loans, announced a plan to buy government bonds of up to NIS 50 billion on the secondary market and allocated $15 billion for dollar-shekel swap deals.
Yaron said, "The swift response of the Bank through these measures was rapid and determined and returned these markets to proper functioning very quickly."
Bank of Israel Deputy Governor Andrew Abir also recently praised the US Federal Reserve, which also helped ease the situation by extending credit lines to the world's five largest central banks in order to reduce the pressure on the dollar on international forex markets.
Published by Globes, Israel business news - en.globes.co.il - on June 14, 2020
© Copyright of Globes Publisher Itonut (1983) Ltd. 2020