OECD slams BoI's foreign currency purchases

OECD criticizes Israels

The Organization for Economic Cooperation and Development (OECD) has criticized the Bank of Israel's purchases of foreign currency as well as the country's temporary tax increases. "The Bank of Israel's ... continued foreign exchange interventions risk bringing additional inflationary pressures and damaging policy credibility and coherence," the OECD said in a report released Thursday. "The temporary tax increases are due to expire at the end of 2010, contributing to uncertainties for the budget balance in 2011," the report added. Israel's foreign currency reserves rose to a record high at the end of October, as the central bank continued buying dollars. The reserves climbed to $61.2 billion from $60b. at the end of September, the Bank of Israel said. During October, the central bank bought $1.27b., compared with $1.65b. in September, $4.07b. in August and $2.1b. in July. Bank of Israel Governor Stanley Fischer began buying foreign currency in March 2008 and has more than doubled reserves since then in a move aimed at weakening the shekel to help exporters weather the global crisis.