BOI Will Buy Dollars to Offset Gas Earnings

YERUSHALAYIM -

The Bank of Israel declared its intention to buy $3.5 billion in 2014 to offset the effect of projected natural gas production foreign currency earnings on the balance of payments,  Globes reported.

The Bank of Israel explained that the purchase plan is an instrument of its monetary policy and exchange rate policy, adding that it would continue to intervene in the foreign exchange market in situations of exchange rate fluctuations, which are not in line with fundamental economic conditions or when the foreign exchange market is disorderly.

In May, the Bank of Israel estimated the effect of natural gas production on the balance of payments at $2 billion in 2013 and that it would purchase $2.1 billion by the end of the year.

In a subsequent report, the Bank projected that its foreign currency purchases would probably continue until 2018, when the sovereign wealth fund was slated to begin operating.