Prof. Yaron’s statement: The exchange rate of the dollar against the shekel fell yesterday to a level of NIS 3.24 – which led to the intervention of the central bank, which purchased hundreds of millions of dollars. As a result, the dollar strengthened slightly against the shekel, noting that the governor Prof. Amir Yaron Does not treat with equanimity what is happening in the currency market.
In a lecture given this week at the Horowitz Conference, the Governor clarified that the Bank of Israel will do whatever it takes to protect the dollar. According to him, “Currency purchase policy is one pillar of monetary policy, joining a series of broad steps taken in the crisis.”
According to Yaron, “Despite the good aggregate performance so far of exports, rapid appreciation may hurt the performance of exports and the industries that produce import substitutes later, making it difficult for the economy to recover.
The governor explained that the weakening of the dollar is a global phenomenon, and the shekel did not stand out in particular against the dollar – thanks in part to the Bank of Israel’s policy in the foreign exchange market. The Bank of Israel’s currency purchases, which totaled $ 17 billion from the beginning of the year to November, helped keep up with the inflows of currency that entered Israel and moderated the rate of appreciation.
The Governor added: “In the current circumstances, the level of currency reserves (which stands at $ 163 billion) does not constitute a limit on the policy of purchasing foreign currency. The Bank of Israel intends to continue the policy in the foreign exchange market in 2021, and to purchase foreign currency in the amount required. “In order to prevent the continuation of the appreciation beyond what is derived from the basic data in the economy.”
Analysts and investment managers also estimate that the dollar has weakened in the face of excess trade in Israel. Ofer Klein, Harel’s chief economist, explains that the recovery in exports in the third quarter is one of the reasons for this.
Yossi Freeman, CEO of Finco Financing, estimated yesterday: “The market has been flooded with foreign currency because of foreign customers selling dollars for bond investments and the institutional entities that seek to protect currency exposure in global investments.”