The purchase is to offset the estimated effect of natural gas production on the balance of payments.
The Bank of Israel announced today that it will purchase $1.8 billion in foreign currency in 2016 to offset the effect of natural gas production on the balance of payments. The projection was influenced, among other factors, by the drop in global energy prices, which decreases the effect of natural gas production in Israel on the exchange rate.
In May 2013, the Bank of Israel first announced the program to purchase foreign exchange in line with the estimated effect of natural gas production on the balance of payments. The Bank’s assessments of the total impact on the balance of payments resulting from natural gas production and the foreign exchange purchases is updated periodically and reported to the public.
The Bank of Israel said that this purchase program is an additional instrument in its monetary policy and of the exchange rate policy which is consistent with it. It added, "The Bank of Israel will continue to operate in the foreign exchange market in situations of exchange rate fluctuations, which are not in line with fundamental economic conditions or when the foreign exchange market is disorderly."
Published by Globes [online], Israel business news - www.globes-online.com - on November 19, 2015
© Copyright of Globes Publisher Itonut (1983) Ltd. 2015
Bank of Israel photo; Ariel Yeruzolimsky