Bank of Israel reserves hit record $60 billion in September

Israel's foreign currency reserves soared to $59.97 billion in September, an increase of $2.198 billion from the end of August, the Bank of Israel reported yesterday.

The central bank has stopped its routine purchase of $100 million every business day (and $50 million every Friday), which it did for more than a year to shore up the enfeebled dollar against the shekel. But the Bank of Israel has left itself free to intervene in the forex market if it feels the need. During September, it acquired $1.6 billion.

Revaluation of foreign currency reserves contributed another $582 million to the rise in September, while the private sector showed a $6 million drop in foreign currency holdings, and the state transferred $167 million overseas during the month.

Also, the Bank of Israel carried out part of its acquisition of International Monetary Fund Special Drawing Rights, 100 million SDRs so far out of a total of 500 million, at $1.40 apiece, for another $140 million reduction in the central bank's forex holdings.

The Bank of Israel again intervened in the forex market yesterday, buying at least $200 million in the early afternoon. Its intervention boosted the dollar's exchange rate against the shekel to NIS 3.74, roughly unchanged from its starting rate for the day.

However, the trend went against the dollar yesterday: It weakened by 0.7% to a representative rate of NIS 3.733, following weakness in world markets, where the dollar lost about half a percent against the euro to 1.47 dollars. In Israel, the representative rate was set early, at 12:30 P.M., because of the Sukkot holiday.

The dollar did receive some support from the G7 leaders meeting in Istanbul before the International Monetary Fund conference, but in the end a need for a strong dollar was not mentioned in the final statement.