The Bank of Israel was quick to deny reports in the press this morning comments by Deputy Governor Zvi Eckstein that the central bank would end its dollar purchasing program in two months. The reports said that the program would shortly be scaled back to $25 million a day from $100 million a day. The Bank of Israel expanded the program to $100 million a day on July 10.
A senior Bank of Israel official told "Globes" this morning, "There has been no decision regarding the dollar purchasing program. Governor of the Bank of Israel Prof. Stanley Fischer has given no new instructions on this matter, except to continue closely monitoring developments in the foreign currency market."
The source added, "The Governor intends to complete the purchasing program, which is designed to boost Israel's foreign currency reserves by $10 billion, and it will be carried out." He cautioned, however, that the program might be scaled back to purchases of $25 million a day, depending on the shekel-dollar exchange rate.
As for ending the program altogether, the source said, "This option does not exist, and it is mathematically illogical, since the Bank of Israel has bought less than $3 billion worth of dollars to date. At least three more months are needed to buy $10 billion at a rate of $100 million a day."
Manufacturers were distraught by the report that Bank of Israel planned to halt its dollar purchasing program. A top manufacturer told "Globes", "Sometimes it's better to shut up and say nothing. The Bank of Israel doesn’t have to announce what it will do in the market tomorrow, it only hurts us and the credibility of the Bank of Israel itself."
The Manufacturers Association of Israel asked Eckstein and the Bank of Israel spokesman to issue a denial, but the Bank of Israel has so far declined to do so.
Published by Globes [online], Israel business news - www.globes-online.com - on August 10, 2008
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