Israel to buy $12 billion by mid-2010
Bank of Israel pledges to buy $25 million each trading day over course of two years in attempt to stop freefall of US currency
Israel's central bank announced on Thursday that it would buy more than $12 billion over the next two years in order to hike its reserves and to stabilize the shekel-dollar exchange rate.
An official told the media the Bank of Israel would begin buying 25 million dollars each business day and continue doing so over the period.
Commenting on the decision, Finance Minister Ronni Bar-On said it was important "precisely because of the drop in the dollar."
Following the announcement, the dollar surged to 3.445 shekels from 3.390 on Wednesday.
Last week, the central bank said it bought dollars in a bid to stop the US currency from slipping below an 11-year low against the shekel. The unlikely move, unheard of in the past decade, saw Bank of Israel Governor Stanley Fischer order the purchase of some $300 million, in an attempt to stop the dollar – which fell 2% and ended Thursday's trading an the 11-year low of NIS 3.403 – from sliding further.
