Leaderless BOI Deals With Surging Shekel


After weeks of drift, during which the value of the dollar to the shekel continued to erode, the Bank of Israel has intervened with a purchase of dollars and on Wednesday the situation was described as stabilized, Globes reported.

FXCM Israel said on Wednesday, “The shekel-dollar exchange rate has fallen below the low it reached in May, to NIS 3.545/$, its lowest level since August 2011. The rise in the exchange rate after Stanley Fischer announced his policy to stem the shekel’s appreciation, which included an interest rate cut and dollar purchases, has been completely wiped out. The appreciation of the shekel is increasingly weighing on exporters and manufacturers, and will harm the economy. Technically, if the fall worsens, the next important support level is NIS 3.50/$.

The lack of a permanent BOI governor after two candidates were forced to withdraw their names, was singled out as a crucial factor.

“There is no question that speculators are exploiting the vacuum in leadership at the Bank of Israel, and fueling demand for shekels. The dollar’s weakness in international markets is putting more pressure on the shekel-dollar exchange rate. Without a serving governor, and with the great uncertainty about the next candidate, the Bank of Israel’s standing in the market has been severely harmed. Even though she is acting governor, Karnit Flug should intervene in the market under Fischer’s dollar purchasing program, which is not being applied right now. There is no question that the appreciation of the shekel will be the most burning issue when the new governor is chosen and he will have to act fast, creatively, and practically,” FXCM Israel said.

The shekel-dollar exchange opened down but by midday was up 0.05% in inter-bank trading, compared with yesterday’s representative rate, to NIS 3.555/$, and the shekel-euro exchange rate was up 0.06% at NIS 4.718/€.

Meanwhile, Prof. Jacob Frenkel’s reputation took another blow, as Hong Kong authorities disclosed that he was arrested for shoplifting.

The letter from the Hong Kong Department of Justice contradicts the version of events that Frenkel told the Turkel Committee, according to which it was a simple misunderstanding, Haaretz said, though it did confirm that no charges were brought against him.

The nomination and withdrawal of two candidates, Frenkel and Leo Leiderman, has created a furor and there have been calls for the establishment of a panel to review future nominations. Currently, they are handled by Israeli Prime Minister Binyamin Netanyahu and Finance Minister Yair Lapid, who have been blamed for bungling the matter.

“Only a madman would offer his candidacy for governor of the Bank of Israel,” Knesset Finance Committee chairman MK Nissan Slomiansky (Jewish Home) said at a committee meeting during the Knesset recess to discuss the delay in appointing a new governor. Civil Service Commission Moshe Dayan, National Economic Council chairman Eugene Kandel, Bank of Israel officers, and other officials participated.

“I fear that the ongoing saga over the appointment of a governor, including the media digging into the pasts of potential candidates, has caused top economists who would be worthy of this exalted post to avoid even mentioning their names for it,” Slomiansky lamented.

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