Flug Takes Flak Over Dollar Dip


As the shekel/dollar exchange rate continued to deteriorate in recent weeks, criticism of Governor of the Bank of Israel Dr. Karnit Flug has become increasingly shrill.

Globes on Sunday ran a sampling of the “barrage of criticism from Israel’s most senior analysts” of Flug’s passivity in an increasingly dire situation.

On Thursday, Flug met with leading capital market experts (chief economists from the banking system and institutional bodies) in a routine briefing, but the word about it afterwards was hardly routine.

One senior analyst said, “It’s not clear how she let the dollar reach where it is against the shekel.”

Another senior analyst said, “Dramatic things are happening in the capital market and it’s not clear why she hasn’t appointed a deputy governor who understands the subject.”

A third observed that “Flug radiated a lot of optimism due to the fact that the Bank of Israel raised its growth forecast, so probably as far as she is concerned everything is fine. Flug has been repeating this mantra since May that the exchange rate hasnchanged very much…. Really.”

Flug reportedly told the analysts that she rejects the idea being floated of setting an exchange-rate floor, and quoted Fischer, “A central banker never says never.”

“If she thinks she can spend five years copying Fischer’s policies, she’s mistaken. She’s not Fischer,” was the concluding comment about Flug.

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