The Bank of Israel renewed its interventions in the currency market on Tuesday, buying an estimated $100-150 million after the shekel-dollar exchange rate fell to 3.54. The move resulted in a slight increase in the value of the dollar relative to the shekel, which was trading at NIS 3.55 later on Tuesday. The euro, by contrast, continued losing value relative to the shekel, trading at NIS 4.71.
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Tuesday’s dollar purchase comes after several weeks of inaction by the central bank in the currency market, a possible result of the failure to appoint a permanent replacement for former bank governor Stanley Fischer.
The ongoing lack of a permanent governor at the central bank has contributed to the unabated appreciation of the shekel, according to an analyst at forex company FXCM Israel.
There have been calls the market for a more activist approach by the central bank. Acting governor Karnit Flug should cut the interest rate by 0.25% to 0.5% to halt the appreciation of the shekel and help exporters, said Nir Omid, vice president of portfolio management at financial services company Tamir Fishman.
"There is no reason why such a reduction shouldn't take place immediately," Omid said. "Inflation is at the middle of the target range, inflation expectations are below the middle of the target and, in the meantime, exporters are bleeding out and growth is becoming weaker."
The dollar's value has been oscillating in trading in world currency markets this week, as analysts seek to take into account the implications of the disappointing jobs report published by the United States' Bureau of Labor Statistics last Friday.