Fischer defends dollar purchase

Bank of Israel governor: Israeli intervention in foreign exchange market meant to stabilize prices.

stanley fischer 88 224 (photo credit: Ariel Jerozolimski)
stanley fischer 88 224
(photo credit: Ariel Jerozolimski)
Israeli intervention in the foreign exchange market last week was not indicative of any monetary policy change, but rather was an act meant to maintain price stability in keeping with government objectives, Bank of Israel Governor Stanley Fischer said on Sunday. "We are going through a tough period of instability and uncertainty in the global market," Fischer said during a press conference. "Recently, the value of the shekel against the dollar, and against other foreign currencies, has started to become less stable." "By December 2007, we were able to say that the phenomenon that was taking place was less a strengthening of the shekel, and more a weakening of the dollar," Fischer noted. Last Thursday, the Bank of Israel intervened in the foreign exchange market for the first time since 1997, buying an undisclosed amount of foreign currency as the shekel-dollar exchange rate fell below the psychological barrier of NIS 3.40. According to Fischer, the fact that the Bank of Israel was not involved in the foreign exchange may have worked to the shekel's advantage. "Despite this fact, or maybe because of the fact that we didn't intervene [during that time], the shekel was one of the most stable currencies in the world against the dollar," he said. Defending last week's dollar purchase, the Bank of Israel governor said that "the downward trend has ended, and in the past few days, the dollar has begun to strengthen in relation to the value of the shekel."