The Bank of Israel bought a total of $600 million in foreign currency over a two-day period in mid-March, the first time the bank has intervened in the market since 1997, in order to stem the rapid plunge in the dollar's value against the shekel. "The action taken by the central bank seems to have worked out, at least in the short term. Since the time of intervention, the shekel-dollar exchange rate has risen from the 11-year low of NIS 3.35 in mid-March to around NIS 3.56 today," said Benny Menashe, head of the trading room at Finotec's London office in an interview with The Jerusalem Post. "But there is a certain risk or price that the central bank might have to pay for the action it has been taking in terms of the effect on inflation. Looking ahead, the bank will need to act very carefully to avert high inflation risks." Following the dollar purchases on March 13 and March 14, which the bank attributed to "unusual movements" in the shekel exchange rate, the bank also announced that it had bought another $100m. since March 20 as part of its two-year program to increase foreign currency reserves to between $35 billion and $40b. by buying $25m. in foreign currencies daily. The bank said Wednesday that foreign currency reserves rose by $930m. from February this year to a total of $29.42b. at the end of March. Speaking at the Knesset Finance Committee on Wednesday, Bank of Israel Governor Stanley Fischer said that without taking into consideration the effect of the shekel's appreciation on local exporters, Israel can expect damage to local exports to the US as a result of a slowing US economy and the global financial crisis. On Tuesday, the Bank of Israel lowered its growth estimate for the local economy in 2008 to 3.2 percent, down from the previous forecast of 3.5%, on expectations that a deepening global economic slowdown would impact the local economy. Fischer reiterated that Israel's economy was in good shape to weather the global economic downturn, provided responsible interest rates and budget policies were maintained and the current macroeconomic policy was continued. "After four years of rapid growth, the economy is forecasted to grow this year at a lower rate of 3.2%, which is still much higher than economic growth forecasts in the US and Europe. We have a good chance of getting through the upcoming period of uncertainty in fairly good shape. It all depends on us from the point of view of growth and economic stability," said Fischer. "Adherence to tight fiscal targets the government has set itself is the key to continued growth." Fischer emphasized that the bank would continue to stick to the current interest rate policy, with the central aim of maintaining a price stability target of between 1% and 3%. "The interventionist steps we have taken over the past month to boost reserves and recent interest rate cuts of 1% are all in line with our target to bring inflation back within its target range of below 3% by this year and strengthen the financial stability of the economy," said Fischer. Commenting on the crisis in financial markets around the world and the US in particular, in the US, Fischer said that there has been a sense of change in the marketplace ever since the US Federal Reserve started to intervene in the crisis. "One can sense a change in the atmosphere in the financial markets. We are talking about a change in the atmosphere and not more than that, which is not a lot to build on, but a change in the atmosphere as expressed in optimism is an important element in a crisis," said Fischer.