Bank of Israel Intervenes in Currency Market, Purchases $801 Million as Dollar Weakens
The Bank of Israel revealed on Sunday that it made an unusual intervention in the foreign exchange market;
Purchasing $801 million after the U.S. dollar weakened sharply against the shekel. It marks the first time since 2022 that the central bank has bought dollars.
In a statement, the bank said the purchase was carried out as a one-time measure “to maintain the continued orderly functioning of the markets.”
According to data released by the Bank of Israel, the country’s foreign exchange reserves stood at approximately $238.7 billion at the end of May, an increase of $2.95 billion from the previous month.
Foreign exchange reserves were equivalent to 37.2% of Israel’s GDP.
The move comes after comments made last Tuesday by Bank of Israel Governor Prof. Amir Yaron at the Eli Hurvitz Conference of the Israel Democracy Institute.
Yaron said that if inflation expectations continue to decline, it would justify a more accommodative monetary policy at a faster pace.
Since those remarks, the dollar has steadily weakened, falling more than 3%. The last representative exchange rate, set on Friday, stood at 2.908 shekels per dollar, while the euro was set at 3.3812 shekels.
Following the central bank’s rare intervention, markets will be closely watching the direction of the currency market and the potential implications for interest rates, inflation, and the broader Israeli economy.
