Forex reserves rise as shekel strengthens

Bank of Israel Credit: Shutterstock Alon Adika
Bank of Israel Credit: Shutterstock Alon Adika

The increase was the result of a revaluation, as the shekel appreciated during July, which increased the reserves by roughly $4.51 billion, the Bank of Israel reports.

Israel’s foreign exchange reserves at the end of July 2022 stood at $197.841 billion, an increase of $4.031 billion from their level at the end of the previous month, the Bank of Israel reports. The level of the reserves relative to GDP was 39.5%.

The increase was the result of a revaluation, as the shekel appreciated during July, which increased the reserves by roughly $4.51 billion. The increase was partly offset by private sector transfers of $208 million and government transfers to abroad totalling $280 million.

This was the sixth consecutive month that the Bank of Israel made no foreign currency purchases, as was its practice last year, in order to moderate the then strengthening of the shekel.

In the first half of 2022, the Israeli currency weakened sharply but in July the shekel strengthened 5.1% against the basket of the world's major currencies, and gained 2.8% against the dollar and 5.4% against the euro. Despite the widening interest rate gap the shekel continues to gain against the dollar and on Friday the Bank of Israel set the shekel 0.448% lower at NIS 3.335/$ - the strongest the shekel has been against the dollar in over two months. However, in futures trading the shekel is 0.60% higher at NIS 3.355/$.

Last year the Bank of Israel purchased $35 billion in foreign currency to help exporters, by moderating the strengthening of the shekel. For much of the year, the Bank of Israel bought an average of $5 billion in foreign currency per month. But with the shekel weakening in 2022, the Bank of Israel bought only $356 million in foreign currency in January 2022, after buying $739 million in December 2021.

The foreign exchange reserves reached a record $213 billion in December 2021.

Published by Globes, Israel business news - en.globes.co.il - on August 7 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

Bank of Israel Credit: Shutterstock Alon Adika
Bank of Israel Credit: Shutterstock Alon Adika
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