As the Bank of Israel continues to purchase foreign currency in an effort to stem the rapid plunge in the dollar's value against the shekel, some economists now forecast that the bank's two-year intervention program might not be realized as planned. Instead the bank is expected to continue to cut interest rates in the remainder of the year, according to economists at Psagot Ofek Investment House. "There is a chance that the daily interventionist program into the foreign currency market operated by the Bank of Israel will not be continued in this format over the whole course of the coming two years as announced," said Vered Dar, chief economist at Psagot Ofek. "It is possible that at some stage - as the shekel depreciation accelerates - the central bank will freeze or cancel the program altogether. The interventionist program by the central bank has not received much attention in the bank's interest rate decision-making, while interest rate decisions by the US Federal Reserve and the European Central Bank have." In March, the Bank of Israel purchased foreign currency for the first time since 1998 for $600 million over March 13 and 14. Following the dollar purchases on those two days, 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 of Israel said Monday that during March, the shekel appreciated against the dollar by 2.3 percent and depreciated against the euro by 1.6%. From the beginning of the month until March 19, the shekel appreciated against the dollar by more than 7%; on that date, the trend reversed and the shekel started to weaken against the dollar beyond the NIS 3.60 level, in light of the Bank of Israel announcement of its intention to increase the foreign currency reserves over the next two years and its purchases of foreign currency. However, since the beginning of April, the shekel reversed again, gaining 4.9% against the dollar (trading at NIS 3.46) and 4.1% against the euro, said analysts at Leader Capital Markets, who expect the shekel to weaken against the dollar to a rate of NIS 3.68 by the end of the year. Furthermore, the Bank of Israel reported that non-residents invested a total of $802m. in Israel in March, marking a slowdown from $1.13b. in February. During the same period, foreign direct investment dropped to $261 million, compared with a monthly average of about $500m. in the last few months. Households withdrew $193m. from their foreign currency deposits in Israel and abroad, in contrast to the accumulation that has characterized their activity for more than a year. "It is too soon, however, to conclude that this is a reversal of the trend," stated the central bank. In addition, households also realized investments in mutual funds that invest foreign currency abroad, to a greater extent than the average realizations over the past year.