Bank of Israel to buy $30b. of foreign currency in 2021 as shekel soars
The shekel has appreciated more than 10% against the dollar since the beginning of 2020.
By REUTERSThe Bank of Israel building in Jerusalem(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
The Bank of Israel plans to buy $30 billion of foreign currency this year to help stem appreciation of the shekel, it said on Thursday.The shekel earlier in the day reached 3.11 per dollar, its strongest level since 1996. It changed directions after the announcement, weakening to 3.18.The central bank said the policy change “is intended to provide the market with certainty regarding the bank’s commitment to dealing with the recent sharp appreciation, and thus support the economy’s continued dealing with the economic ramifications of the COVID-19 crisis.”The shekel has appreciated more than 10% against the dollar since the beginning of 2020, unfazed in that time by $21 billion in foreign currency purchases by the central bank.Governor Amir Yaron previously appeared to downplay the shekel’s strength, including at last week’s interest rate decision, pointing to a broadly weak dollar and calling the reasons for the shekel’s strength “mostly good.”In recent months, the central bank said, foreign currency flows into Israel’s economy have intensified due to growth in the current account surplus, direct investments, large-scale foreign currency sales by institutional investors against their investment profits in capital markets abroad, and an increase in foreign investment in Israeli government bonds.
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