Bank of Israel to invest $8B in Canada, Australia and Norway

Bank's director of Market Operations reveals decision to invest in non-USA, non-euro zone countries

Amnon Atad, Calcalist|Published: 03.05.12 , 15:45

The thick shroud of secrecy around the composition of the Bank of Israel's foreign currency reserves is beginning to unravel.

In an exclusive interview to Calcalist Director of Market Operations at the Bank of Israel Andrew Abir offers a glimpse behind the scenes of the Bank's best keep secret for the past 60 years.

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"We examine the contingencies which could call for using our foreign currency reserves for which we analyze the currency composition of the government's debt repayments in foreign currency and the makeup of the government's emergency imports", Abir explains.

In the past 5 years, national reserves grew from $25 billion to $75 billion. "Once reserves hit the $75 billion threshold, and on the backdrop of changes and declines on US and European markets, we decided to use 10% of the foreign currency reserves to invest in other currencies other than dollars and euros", explains Abir.

The selected markets offer better baseline figures with smaller sovereign debt. Among them are Australia, Canada, Norway and Sweden.

"we believe it's the right thing to do because it offers a better yield and puts us on a stronger position in terms of yield to risk ratio," sais Abir.

Abir added that the bank is currently not exposed to European sovereign debt, after pulling its investments from Italy and Greece before the European debt crises hit.

When asked about the possibility that the Bank will acquire dollars to weaken the shekel, Abir stated that since the dollar exchange rate has not changed dramatically since the last purchase in July 2011 such action is not planned.