Subscribe to Print Edition | Sat., June 14, 2008 Sivan 11, 5768 | | Israel Time: 06:42 (EST+7) web haaretz.com   Back to Homepage Rosner's Domain Diplomacy Defense Jewish World Opinion National Print Edition Car Rental Books Peres Conference Business Real Estate Easy Start Travel Week's End Anglo File

Last update - 22:13 13/03/2008 Israel Bank intervenes in foreign currency market, buys dollars By Moti Bassok, Hagai Amit and Dafna Maor, Haaretz Correspondents Tags: Bank of Israel, Economics  The Bank of Israel intervened in the foreign currency market on Thursday for the first time since 1997 and bought dollars. The move surprised almost everyone in the financial markets given that central bank governor Stanley Fischer, as well its foreign currency department head Barry Topf, had previously said the possibility that the bank would intervene was unlikely, and would only occur if there was a market failure. The Bank of Israel stubbornly refused to say how many dollars it had purchased. Its simple, short announcement said: "The Bank of Israel says that in light of the unusual behavior of the shekel exchange rate in recent days, the Bank of Israel has purchased foreign currency during trading." Advertisement The bank also refused to say whether it would continue to intervene in coming days. Thursday, after starting the day at NIS 3.482, the shekel gained 3% against the dollar, and reached NIS 3.35, the dollar's lowest level since 1997. After the central bank started buying - and the action became known - the dollar rebounded by over a percent to NIS 3.43. Estimates are the bank bought $100 million. Fischer made the move without consultations, and clearly wanted to signal to foreign currency traders that from now on there is anther player in the game, though nothing in his actions or statements promised he would do so again. The intervention caught the Finance Ministry by complete surprise. Finance Minister Roni Bar-On and other senior officials refused to comment Thursday. Dollar at record lows "It doesn't matter any more what the shekel does against the dollar ¬ but what the shekel does against the euro and the yen," said Thursday the investment manager of one of the branches of a foreign bank operating in Israel. His comment reflected how little relevance the dollar now has to the strength of the Israeli currency, as a result of the steep declines in the American greenback in recent months. The shekel also rose against almost all other currencies on Thursday: the euro-shekel exchange rate fell 1.7% to NIS 5.25, and the British pound lost 1.5% Thursday against the shekel to a representative exchange rate of NIS 6.92. Nevertheless, there is a difference between the dollar and European currencies in past months in relation to the shekel: against the euro the shekel has stayed stable in the last year. The proof is in Thursday's events. Even though the shekel gained against both the euro and dollar, the euro still hit a record high once again against the dollar, which has lost 50% of its value against the unified European currency since 2000. Even the Fed's announcement of its $200 billion borrowing plan for U.S. banks, which stirred Wall Street to 4% gains on Wednesday, did not impress foreign currency markets. The dollar exchange rates here in Israel, and all around the world, seem to be heading in one direction only. True, a probable interest rate cut next week by the Fed along with its bond lending program should help raise the dollar sooner or later by strengthening the American economy, but for now there seems to be no end in sight. The Fed's choice of method to provide funds has been questioned. It is not at all clear that the large banks will take the new funds and pass them on, but instead may simply suck the billions into the huge financial holes opening up in their credit portfolios. It seems that foreign exchange markets are preparing themselves for the expected 0.5% interest rate cut from the Fed next Tuesday. This will reopen the gap between U.S. and Israeli rates to 1.25%. Fischer will announce his interest rate decision for April only on March 24. It is clear that the pressure on Fischer from the business sector, in particular manufacturers and exporters, to lower this gap between the dollar and the shekel will only increase as that date comes closer. The February CPI, to be announced on Sunday, is expected to be critical in influencing Fischer's decision. A low consumer price index, reflecting lower inflationary pressures, will allow Fischer to listen to exporters' claims and lower short-term interest rates by another 0.25%. Around the world Things were no better for the dollar around the world Thursday, as the greenback fell below 100 yen for the first time since 1995. The results of the U.S. credit crisis, no longer confined to only the subprime mortgage market, and combined with economic statistics indicating a recession, has brought the dollar to new lows against many world currencies including the euro. The yen-dollar rate on Thursday was 99.77 and for the euro 1.5624. There were expectations that the Bank of Japan would intervene in foreign currency trading, as the rise of the yen makes Japanese companies less competitive in world markets, as they are very much dependent on export markets. The Japanese central bank has intervened in currency markets only four times since 1995, each time when the yen crossed the 100 yen to dollar barrier. Since June 22, 2007 the yen has gained 24% against the dollar. Citi forecasts the dollar will fall to only 95 yen per dollar. Bookmark to del.icio.us   Snoop Dogg in Israel American rapper Snoop Dogg slated to perform in Ramat Gan. Late date Scientists revive 2,000-year-old date seed found at Masada.   1.   Sick Dollar Getting Worse 17:01  |  MichaelF 13/03/08   2.   But the Yuan is Falling, too 19:36  |  Mark of Lewiston 13/03/08   3.   The decline of the dollar has only one reason 21:41  |  Kris Lazar 13/03/08   4.   I heard that Canadians had a new name for the US dollar 22:12  |  Paul Wood 13/03/08   5.   Israel`s mega problem 22:52  |  Chris Linthwaite 13/03/08   6.   Thanks, but Israel Bank would be wise 00:29  |  Mark Lincoln 14/03/08   7.   like everyone on the Hebrew site was saying - SIMPLE SOLUTION 00:45  |  Moshe 14/03/08   8.   The US economy will rise again 01:20  |  Jon 14/03/08   9.   Chris lithwaite- money genius ?? 03:08  |  Avrum 14/03/08   10.   It`s a good financial move. Buy Low. 03:09  |  Pablo B 14/03/08   11.   http://www.jihadwatch.org/archives/020295.php 03:41  |  Oddvark 14/03/08   12.   Sub Prime nonsense 04:29  |  The Chancellor 14/03/08   13.   Cute ideas but mostly wrong 05:55  |  James 14/06/08

Read & React Bradley Burston: Israel's own version of Holocaust denial Responses: 82 'Israel Lobby' authors in Jerusalem: Ahmadinejad not inciting to genocide Responses: 246 Mofaz: Hamas should be asking Israel for calm, not vice versa Responses: 115 Hamas claims responsibility for deadly blast in Gaza house Responses: 169 A year after Gaza takeover, Hamas shows no sign of ending violence Responses: 77 Rosner's Domain Judaism's swing vote: what to do with Jewish singles? What to make of the Journals of Rachel Corrie? (WTR) Poll: When should Israel have elections? Bobby Kennedy and the history of pro-Israel candidates NJDC: McCain's advisor soft on Iran (WTR) More Headlines 23:09 Palestinian woman films masked men attacking W. Bank farmers 04:34 EU to offer fresh incentives to Iran in bid to end nuke program 05:53 U.S. pastor apologizes to Jews for 'God sent Hitler' comments 22:48 EU supports boosting ties with Israel, debates linking relations to peace talk progress 19:50 How to engage the pivotal demographic of American Jewish singles 05:26 Next year in Weimar? Grad student pushes for Jewish state in Germany 20:26 Assad: Israel has learned it needs peace for security 15:21 The torture police / Every Shin Bet move is watched by its legal team 17:30 Barak: Kadima power struggle stalling cease-fire with Hamas 22:22 Polish priest accused of anti-Semitic remarks won't be prosecuted 13:40 Hamas claims responsibility for deadly blast in Gaza house 18:58 Report: Turkey and Syria consider joint nuclear energy project Previous Editions Select Day 13 jun 12 jun 11 jun 10 jun 09 jun 08 jun 06 jun 05 jun 04 jun 03 jun 02 jun 01 jun

Special Offers Advertisement In the heart of Tel-Aviv The Meier on Rothschild tower Jerusalem of Gold Luxury apartments in Jerusalem's finest location Your vacation starts here Israel Travel Center Guaranteed Lowest Rates Istudy Learn Hebrew in 3 months The Terraces Your Ultimate Coastal Address On Nitza Boulevard, North Netanya Pardes Institute Summer Sessions http://www.pardes.org.il/ Free the Palestinians from: Corrupt Kleptocracy, Tyrannical Theocracy, Abysmal Anarchy Fattal Hotel Chain Perfectly located hotels on best resorts of Israel. ISRAEL BONDS Build Israel Israel bonds - a multi-purpose way to celebrate Israel's 60th Eldan Rent a Car Israel's leading car rental company offers you a 20% discount on all online reservations Junkyard Junk a car - get free towing nationwide and a tax-deductible receipt

Home | TV | Print Edition | Diplomacy | Opinion | Arts & Leisure | Sports | Jewish World | Underground | Site rules |

Real Estate in Israel | Travel to Israel with Haaretz | Hotels Israel | Restaurants Israel | Tourist attractions Israel | Shops Israel

birthright Israel

Haaretz.com, the online edition of Haaretz Newspaper in Israel, offers real-time breaking news, opinions and analysis from Israel and the Middle East. Haaretz.com provides extensive and in-depth coverage of Israel, the Jewish World and the Middle East, including defense, diplomacy, the Arab-Israeli conflict, the peace process, Israeli politics, Jerusalem affairs, international relations, Iran, Iraq, Syria, Lebanon, the Palestinian Authority, the West Bank and the Gaza Strip, the Israeli business world and Jewish life in Israel and the Diaspora.

© Copyright  Haaretz. All rights reserved