The Bank of Israel intervened in foreign exchange currency trading this morning as the shekel continued to strengthen. The Bank of Israel began buying foreign currency at about 10am to weaken the shekel, forex traders reported, after the shekel-dollar exchange rate fell below NIS 3.50/$. The shekel-dollar representative exchange rate was set this afternoon up 0.142% at NIS 3.516/$ and up 0.034% at NIS 3.796/€.
In after-hours futures contracts the shekel-dollar exchange rate was down 0.24% at NIS 3.508/$. Traders report that forex shekel purchases have risen to levels prior to the coronavirus crisis.
Yesterday, the Bank of Israel reported that Israel’s foreign exchange reserves rose $7.594 billion in April to stand at a record $133.539 billion at the end of the month. The increase was the result of: foreign exchange purchases by the Bank of Israel totaling $727 million; a revaluation that increased the reserves by $2.073 billion; and government transfers from abroad totaling $6.484 billion. The increase was partly offset by private sector transfers of $1.690 billion.
Since the start of the coronavirus crisis, the shekel-dollar rate has tended to be linked to the fortunes of global stock markets. As stock markets fall, Israeli banks and financial institutions need to sell shekels and buy foreign currency to cover their overseas positions, and when they gain the position is reversed. To flatten this roller coaster effect, the Bank of Israel has extended foreign currency credit to Israeli banks and institutions.
Published by Globes, Israel business news - www.globes-online.com - on May 8, 2020
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