Fischer: Forex intervention helps exports

Bank of Israel will continue buying foreign currency to prevent shekel from appreciating too much against dollar, central bank chief says

Zvi Lavi and Reuters|Published: 10.03.10 , 12:49

The Bank of Israel will continue buying foreign currency to prevent the shekel from appreciating too much against the dollar and harming the vital export sector, central bank chief Stanley Fischer said on Sunday.

Fischer told a news conference ahead of the International Monetary Fund and World Bank conference in Washington that exports, which account for more than 40% of Israel's economic activity, were more important than losing profits from buying and holding a weak dollar.

"The Bank of Israel is not a bank of profits," he said.

Fischer noted that the key lending rate, which has increased by 1.5 percentage points since August 2009, will continue to rise as long as the global economy maintains its growth forecast and while Israeli inflation remains a threat.

'Financial crisis not fully over'

Addressing soaring real estate prices in Israel, the central bank chief said that "apartment prices are going up very fast. We are examining the situation constantly." He added that additional measures would be taken in the event of "no drastic change on the supply end."

Fischer stated that he would not let the Israeli economy slide into a crisis due to the housing prices, like what happened in other countries in the world, mainly the United States. "I won't let it happen here as well," he said.

He rejected claims of tensions or a crisis in his relations with Finance Minister Yuval Steinitz. "When we met this morning the meeting was positive. But the relations were and remain good," Fischer said.

"I know newspapers have to sell and make headlines, but the finance minister and I have reiterated that we are two doctors with one patient and we have to cooperate. However, from time to time someone said something which made headlines and caused unnecessary noise. But both sides are working for the economy and this requires cooperation."

Addressing Israel's handling of the global financial crisis, Fischer said that "we haven't fully passed the crisis. We can't say that the situation in Israel will continue to be as good as good as it is today."