The Bank of Israel bought up tens of millions of dollars again on Friday on the foreign currency market in an effort to buoy the value of the greenback and stem its fall against the shekel. A strong shekel makes Israeli exports less competitive.

Friday's dollar purchases came after the dollar exchange rate fell to NIS 3.6149. By the end of the trading day, the American currency had recovered to NIS 3.6290, but it was still 0.55% lower for the day. Over the past week alone, the dollar has declined 1.5% against the shekel.

By contrast, the euro strengthened against the shekel Friday and for the week. Friday's representative rate was set at NIS 4.8039. The British pound also gained ground against the shekel, ending the day Friday with a representative rate of NIS 5.6516.

The dollar receded against most major currencies last week, but another factor in the strengthening of the shekel has been the increased production of natural gas from Israel's Mediterranean. This enables Israel to rely more on domestic energy resources and in turn lowers the need to purchase fuel with foreign currency.

The dollar purchases by the Bank of Israel Friday follow $950 million in purchases of the U.S. currency during the month of May - a two-year high. Of that May figure, $230 million was designated to address the foreign exchange impact of the start of production from the Tamar offshore gas drilling site.

The base lending rate was reduced in mid-May to 1.5% and then again at the end of the month to 1.25%. In mid-May, the central bank also announced a plan to buy up $2.1 billion in foreign currency. Lower interest rates here would tend to depress the shekel by making investment in shekel-denominated government bonds less attractive. But these factors were countered by the weakening of the dollar worldwide following disappointing American macroeconomic figures.

On Thursday, the central bank reported that as of the end of May, it had stockpiled $77.7 billion in foreign currency, $504 million more than what it had a month earlier. The growth was not only the result of purchases by the central bank itself but also from private business sector transfers, but was offset by government transfers abroad and currency revaluations.