Israel's foreign exchange reserves exceed $100b

Bank of Israel  photo; Ariel Yeruzolimsky

The Bank of Israel's foreign currency purchases are aimed at strengthening the shekel to help exporters.

The Bank of Israel's foreign currency reserves crossed the $100 billion threshold in recent days for the first time ever. The Bank of Israel will publish next Tuesday its monthly revision of the reserves as of the end of January, but a simple perusal indicates a high probability that the line was already crossed this month.

As of the end of 2016, the Bank of Israel had $98.361 billion in reserves, following a $1.2 billion increase in December. $300 million of the increase in December is attributable to purchases of foreign currency planned in advance as part of the plan to neutralize the effect of local natural gas production, but most of it is a result of unplanned foreign currency purchases by the Bank of Israel in the framework of its policy of intervening in forex trading in order to prevent shekel appreciation. In line with this policy, the Bank of Israel bought over $500 million this week, including $400 million yesterday after the end of forex trading.

In addition, €2.25 billion raised by the Ministry of Finance debt management unit in London on January 11 was deposited at the Bank of Israel in recent days. One of the Bank of Israel's functions is to manage the government's accounts. According to the most recent update, the Bank of Israel's foreign currency reserves consist of foreign government bonds (84.5%), corporate bonds (5.5%), and shares (10%).

The Bank of Israel Monetary Committee this month approved increasing the share investment ceiling from 9.2% to 10% of the balances. A breakdown of the reserves by currency shows that as of the end of 2016, 70% of the Bank of Israel's reserves were in dollars, 25% in euro, and 5% in pounds sterling. As of the end of 2015, the Bank of Israel's main holdings were in US government bonds (57%), government bonds issued by Germany and other euro bloc countries (25.3%), UK government bonds (2.5%), and Chinese government bonds (1.3%). The yield on the portfolio in 2015 was 0.64%, and its three year average was 0.81%.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 2, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Bank of Israel  photo; Ariel Yeruzolimsky
Bank of Israel photo; Ariel Yeruzolimsky
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