Leiderman, chief economist at Bank Hapoalim and a former nominee to become
governor of the Bank of Israel, said Wednesday he is against imposing a floor
for the exchange rate.
Speaking at the CFO conference in Eilat, Leiderman
said: “Our experience has taught us that in order to be effective, its desirable
that intervention will be carried out in a way that doesn’t give ‘insurance’ to
actors in the market regarding how much, when and what level of exchange rate
the central bank will buy or sell foreign currency.”
floor would be difficult and challenge the bank’s credibility, he
Last week, the Bank of Israel continued its policy of
foreign-exchange intervention to bring the shekel’s exchange rate back above 3.5
to the dollar, where it has remained since.
The policy, which began under
former governor Stanley Fischer in May, was intended to ease fluctuations in the
market, given the exposure of Israeli exporters to a continually strengthening
On Monday, Bank of Israel Governor Karnit Flug deflected a
question from the Knesset Finance Committee on the matter, saying she would not
discuss the issue publicly.
A week earlier, however, former deputy
governor Tzvi Eckstein, who was a short-listed candidate for the governorship
before Flug was ultimately picked, came out in favor of a floor.
interview with Globes last Thursday, Eckstein said: “According to my analysis,
there is room to set an exchange floor with the dollar of NIS 3.3 to NIS 3.34 to
the dollar. An exchange floor must be part of a Bank of Israel policy that
supports another goal: boosting growth and employment under the price-limit
Eckstein refused to directly criticize Flug, saying he respected
her work and that the policy point was simply a matter of
The Manufacturers Association of Israel concurred, calling
on Flug to set a limit to the shekel’s strengthening to aid the export sector,
although it called for the floor to be set significantly above the current
level, at 3.8.
“The current dollar exchange rate creates hardships for
Israeli industry’s competitiveness and is making exports not worth it in many
cases,” the association’s CEO Tzvika Oren said Sunday.
to this report.