The Bank of Israel has resumed foreign currency purchases in order to weaken the shekel. The Bank of Israel reportedly purchased an unknown amount of foreign currency at about 11am this morning, when the shekel-dollar exchange rate fell below NIS 3.50/$.
The rate immediately jumped to more than NIS 3.51/$, but the shekel appreciation then continued and the exchange rate was set for today down 0.455% at NIS 3.499/$. This is the strongest that the shekel has been since March 6.
In the six months prior to the coronavirus crisis, the Bank of Israel purchased some $11 billion in foreign currency to weaken the shekel, boosting foreign exchange reserves to a record $131.25 billion. Despite these attempts, the shekel-dollar exchange rate remained between NIS 3.40/$ and NIS 3.45/$ throughout February.
However, when the coronavirus pandemic created panic on global markets in March, Israeli institutional investors and banks were compelled to purchase large amounts of foreign currency to cover overseas positions and the shekel-dollar rate weakened dramatically to NIS 3.862/$ by March 17. The Bank of Israel stepped in to sell about $7.5 billion in foreign currency from its reserves to the banks and institutional investors.
As the coronavirus crisis eases, the exchange rate has gradually returned to near its pre-crisis levels, and it now looks as those it is business as usual, with the Bank of Israel once again buying foreign currency.
There will be no new shekel exchange rate set until Thursday, as Israeli banks are closed tomorrow for the Independence Day holiday.
Published by Globes, Israel business news – www.globes-online.com – on April 28, 2020
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