A study of the Bank of Israel’s massive purchases of foreign currency to weaken the shekel – produced by the Bank of Israel – has found that the interventions have done their job, according to Globes on Sunday.
The study is the bank’s answer to criticism of a policy that has led to unprecedented foreign-currency reserves of over $100 billion.
It was conducted by Dr. Sigal Ribon of the BOI Research Department, focusing on the interventions’ impact on the exchange rate during 2009-2015. The bank resumed its interventions in March 2008, after staying out of the market for a decade.
The data indicates that for every $100 million of foreign currency purchased, the shekel depreciated by 0.07-0.09 percent. For the $830 million monthly average of foreign currency purchased during this period, a depreciation effect of 0.6% was found for that month.
The shekel has proved almost impervious to Bank of Israel interventions in recent weeks, however. Recent buys of over $1 billion have hardly affected the shekel.
The exchange rate was back down at NIS 3.63 in recent days, despite the interest-rate hike in the U.S. The strong Israeli economy is believed to be the “culprit” for the shekel’s rugged performance. Speculators continue to rate the shekel as one of the world’s strongest currencies and a “safe harbor” for investments.