Photo: Ohad Zwigenberg
Bank of Israel Governor Stanley Fischer. 'Taking necessary steps'
Photo: Ohad Zwigenberg

Bank of Israel buys $200M in forex

Central bank aims to weaken shekel after it hits 19-month high, yet move has little effect

The Bank of Israel bought an estimated $200 million of foreign currency on Tuesday in a bid to weaken the shekel after it hit a 19-month high, although the move had little effect.


With exports comprising 40% of Israeli economic activity, the central bank has made it clear it will not allow a steep rise in the shekel.


A dealer at a large Israeli bank said the central bank had bought about $100 million directly from banks and another $100 million through brokers.


The buying, the central bank's first foray into the market in three weeks, came as dollar-shekel moved below 3.5850. But the moves only nudged the dollar marginally higher, with the shekel fixed at 3.5940, up 0.1% from Monday.


After the fixing, the dollar weakened back to 3.5840 shekels.


Dealers believe the central bank may return on Wednesday.


The central bank declined to comment, unlike after its prior intervention when it said it had entered the market.


The shekel began gaining late last week on the prospects of the government compiling a responsible 2013-2014 budget, expectations that reforms will bolster the economy, the start to natural gas production and Fitch Ratings reaffirming Israel's 'A' credit rating.


Ramzi Gabbay, chairman of the Israeli Export Institute, said Bank of Israel Governor Stanley Fischer had taken the necessary steps to prevent a further deterioration of the economy.


"This decision is particularly significant in light of the trend of congestion that characterized Israeli exports in the first quarter," he said.


Exports rose 1% in the first quarter year over year, mainly on gains in pharmaceuticals and electronic components. But excluding these sectors they fell 6%, Gabbay noted.


"The economic crisis in Europe along with a slowdown in the United States and the ongoing erosion of the real exchange rate severely harms profitability and hurts Israel's exports," he said.



פרסום ראשון: 05.01.13, 08:05
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