After the shekel-dollar exchange rate reached the red line of 6.0 on Monday — it actually fell to NIS 3.592/$ — the Bank of Israel made its anxiously awaited intervention, purchasing at least $100 million, Globes reported, quoting a market source.
The intervention yielded immediate results, as the rate swung back up to NIS 3.62/$.
It was the first such intervention in the market since July 2011.
“$100 million is not so very much for the Bank of Israel, but it is a statement of intent that NIS 3.60/$ does not make it happy,” the source commented.
Manufacturers and exporters have been pressing the BOI to take action, as they watched the value of exports decline on a daily basis with the shrinking dollar.
Last week, Israel Export and International Cooperation Institute chairman Ramzi Gabay said that the strong shekel was hurting small and mid-sized exporters the most.
“This sector is struggling to deal with the prolonged crisis in the global economy, which has reduced demand. The steady erosion of the exchange rate in real terms is a serious blow to their profitability.”
Gabay welcomed the BOI’s dollar purchase. “Governor Fischer has demonstrated his commitment to Israeli exports and economic growth,” he said “I call on the governor to stay on guard to prevent a further appreciation of the shekel, which will harm exporters’ profitability.”
Meanwhile, on Sunday, the Bank of Israel announced a dip in its foreign currency reserves, down to $76.97 billion at the end of March, $308 million less than a month earlier.
The BOI explained that the fall was the result of a revaluation that brought down the reserves by $412 million. However, this was partly offset by a $4 million rise due to private sector transactions, and government transfers from abroad of $100 million.