Last update - 00:00 16/03/2008
Fischer: Bank of Israel to avoid meddling in int'l currency market
By Tal Levy, Haaretz Correspondent
Bank of Israel Governor Stanley Fischer said Sunday that Israel would avoid intervening in the foreign currency market again unless a global crisis erupted.
Fischer sought to ease jittery Israeli financial markets on Sunday just days after the bank intervened in the foreign currency exchange for the first time in more than a decade.
"We will continue to depend on the market, except when there are unique
circumstances. We hope that the intervention will be rare," he said. "We live in a difficult era in the international market, with the financial crisis in the U.S. and its implications all over the world."
Fischer's move to prop up the ailing dollar last week caught local investors off guard. The U.S.-educated economist had previously said it was unlikely he would intervene in the currency market.
Speaking at a hastily convened news conference Sunday, Fischer said a sharp plunge in the dollar's value recently had prompted him to take action.
"We are seeing a foreign currency that is not anchored and we started to witness patterns of pack mentality, he said. Based on that, we decided to intervene ... This is not an emergency situation, it is a unique situation."
Fischer said the central bank's principal goal will continue to be to keep proces stable and preserve inflation rates at the target level set by the government.
"We also have the goals of economic growth and employment in the Israeli economy. We will continue to take measures to support growth, while this does not oppose the safeguarding of stable prices," Fischer said at a press conference following the central bank's buying up some $600 million recent days in a bid to check the greenback's rapid descent.
Last Thursday, when the central bank intervened in foreign currency trading for the first time since 1997, the dollar had reached a low of NIS 3.35, an 11-year low.
Fischer continued: "We have seen over the past months a very difficult period in the international economy, mainly as a result of the financial crisis in the United States, and the consequences of the economic growth in the U.S. on all countries in the world."
"We see these consequences also in the continuous decrease in the dollar value in relation to almost any other currency in the world, and the fluctuation in the finance markets in the U.S. and the world."
Fischer reiterated that "we are going through a very hard time of instability and uncertainness in the global market. This phenomenon is impacting the Israeli market as well."
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