The Bank of Israel today announced, "In view of recent reports, the Bank of Israel states that it will continue to buy dollars at the usual rate of $100 million a day on Monday through Thursday, and $50 million on Friday. These purchases will continue as usual until the Bank of Israel announces otherwise."
The Bank of Israel appended its press release of March 25, which stated in part, "Against the background of the world economic situation and in the context of its overall policy, the Bank will continue to purchase on average US$100 million per day, as part of its program to increase the level of the foreign exchange reserves."
The Bank of Israel noted, "The Bank will continue to review the program from time to time and make adjustments if and when they are required."
On Tuesday, a top capital market source told "Globes", "We're asking top Bank of Israel officials how and when they will stop this, and we get the impression that they don’t know themselves and that they're afraid. We've had very bad experience in this area: they always know when to start to intervene, but know a lot less when it comes to ending intervention in the market."
A senior Bank of Israel source said, "We're not under pressure. We don’t have an exchange rate target, but there is some floor around NIS 4.30/$ that we want to maintain. The moment that economic reality allows us to stop, we'll stop. But we're not there yet."
The official added, "If we were to stop now, we'd end up with an undesirable shekel-dollar exchange rate that would hurt exports and growth. It's possible that the dollar will strengthen strongly on international markets to NIS 4.60 or NIS 4.70, for example, in which case we may see an escape that isn't there now. After a time-out the dollar will naturally fall to NIS 4.40 or NIS 4.30, which is a level that will still support exports."
Published by Globes [online], Israel business news - www.globes-online.com - on May 21, 2009
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