The dollar lost another 0.46% against the shekel Friday to the greenback’s lowest level against the Israeli currency since August 2011. The dollar fell to a representative rate of 3.4590.
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The shekel’s strength has particularly been a concern for Israeli exporters, whose products become more expensive abroad.
The euro, meanwhile, increased Friday to a representative rate of 4.801 shekels. The euro strengthened around the world after the president of the European Central Bank, Mario Draghi, said Thursday he saw no need for stimulus measures.
In the first week of March, Bank of Israel Governor Karnit Flug said the bank was well aware of developments on the foreign exchange market and their impact on exports. In addition to reducing the base interest rate to 0.75% from 1% for March, Flug noted that the BoI was intervening in the market not only to curb volatility but to offset the natural gas production off Israel’s coast, which is supporting the shekel.
Flug also cited studies that stress the importance of a country’s foreign exchange reserves in reducing the chances of an economic crisis.
On Thursday, the Bank of Israel said its foreign currency holdings were at an all-time high of $83.97 billion at the end of last month, about $6.7 billion higher than at the same time last year. The bank said foreign currency reserves had grown by $811 million in February.
The rise stemmed from the purchase of $350 million as part of the plan to counter the effects of natural gas production and an upward valuation of foreign currency holdings by $713 million. This was partially offset by government transfers abroad of $242 million and private sector transfers of $10 million.
With reporting by Reuters.