BoI purchased $3b foreign currency in January

Shekel-dollar ASAP Creative

Israel's foreign currency reserves are close to exceeding $130 billion for the first time.

The Bank of Israel reports that it purchased almost $3 billion in foreign currency in January in an attempt to halt the shekel's appreciation. These purchases together with transfers from overseas by the government increased the reserves by $3.95 billion, bringing them close to exceeding $130 billion for the first time.

Following the report, Bank of Israel sources said that market players would realize that Israel's central bank would continue acting in the foreign currency market as needed in order to achieve the goals of its policy. Since the Bank of Israel began intervening in foreign currency trading last November, Israel's foreign currency reserves have risen by $8 billion.

Governor of the Bank of Israel Prof. Amir Yaron told "Globes" last week that the Bank of Israel would continue using foreign currency intervention as a tool for neutralizing shekel appreciation, because it was a focused tool with a direct impact on the shekel exchange rate. On the other hand, Yaron made it clear that he would not use the interest rate tool, the effect of which would be broader, unless a severe downturn in economic activity in Israel occurs.

As of the end of January, the foreign currency reserves managed by Bank of Israel totaled $129.965 billion, amounting to 33.8% of Israel's GDP. The increase in the foreign currency reserves is attributable to the Bank of Israel's purchases of $2.951 billion in foreign currency in January, $1.166 billion government transfers from overseas, and $5 million transferred by the private sector. The increase was partially offset by revaluation of foreign currency balances amounting to $171 million.

Yet despite the Bank of Israel's massive intervention, the shekel continues to strengthen. The representative rate was set down 0.377$ today at NIS 3.439/$, the strongest the shekel has been against the dollar for two years.

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

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

Shekel-dollar ASAP Creative
Shekel-dollar ASAP Creative
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