Bank of Israel Likely Behind Stable Shekel

The Bank of Israel is purchasing major amounts of foreign currency to weaken the shekel and prevent it from falling below NIS 3.40/$, according to Globes on Wednesday.

Although the central bank has made no statement to that effect, the paper based itself on the suspicious stability of the shekel in interbank trading:

“The shekel-dollar rate dipped briefly below the key psychological barrier of NIS 3.400/$ in afternoon inter-bank trading on Tuesday before the rate was set exactly on NIS 3.400/$. The remarkable stability in the shekel dollar rate over recent weeks suggests that the BoI is purchasing…foreign currency” to maintain the exchange rate at 3.40 or above.

Throughout August the shekel-dollar rate has not moved above NIS 3.424/$, and for the past two weeks it has traded within the remarkably narrow range of NIS 3.40/$ and NIS 3.41/$, the paper noted.

Between May and July, the BoI bought $5 billion in foreign currency to rein in the shekel for the benefit of Israeli exporters. That lifted Israel’s foreign currency reserves to a record $157.7 billion.