Forex reserves shrink as shekel weakens

Shekel-dollar ASAP Creative

The Bank of Israel refrained from foreign currency purchases for the third consecutive month in April.

Israel’s foreign exchange reserves at the end of April 2022 stood at $197.630 billion, the Bank of Israel reports, a decline of $8.533 billion from their level at the end of the previous month. The level of the reserves relative to GDP was 41%.

The Bank of Israel said that the decline was the result of a revaluation that decreased the reserves by approximately $7.35 billion, government transfers abroad totaling $209 million and private sector transfers of $974 million.

This was the third consecutive month that the Bank of Israel made no foreign currency purchases, as was its practice last year, in order to moderate the strengthening of the shekel. Since the start of 2022, the shekel has been weakening on its own account due to global trends. The steep decline in share prices on Wall Street has forced Israeli institutional investors to sell shekels and buy foreign currency to hedge their overseas positions. The Russian invasion of Ukraine has strengthened the dollar worldwide as global uncertainty rises and investors seek the safe haven of the US currency.

On Friday the Bank of Israel set the shekel-dollar rate up 1.877% at NIS 3.419/$. The shekel is at its weakest against the dollar in 18 months.

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.

Published by Globes, Israel business news - en.globes.co.il - on May 8, 2022.

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

Shekel-dollar ASAP Creative
Shekel-dollar ASAP Creative
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