The Bank of Israel plans to buy $3.5 billion in the coming year to counteract the effect natural gas production will have on the exchange rate, it announced Tuesday.
- Dollar Drops to Two-year Low Against Shekel
- Bank of Israel Buys $100-150 Million to Halt Shekel’s Appreciation
- Delek Drilling and Avner Shine as Tamar Natural Gas Production Goes Online
The central bank determined the size of its dollar buying program for next year based on the estimated impact of natural gas production on the balance of payments in 2014.
"As in the past, the Bank of Israel will continue to act in the foreign exchange market when exceptional fluctuations in the exchange rate are not in tune with basic economic conditions or when the foreign exchange market does not function as required,” the bank stated.
The dollar rose 0.15% in trading on Wednesday to nearly NIS 3.54 after reaching a low of NIS 3.50 earlier in the week, while the euro held steady at NIS 4.78.
Employees at the research department of foreign exchange broker Forex Capital Markets Israel (also known by brand name FXCM) said Tuesday that the general trend in foreign exchange markets saw the dollar holding steady in value against other major currencies. This trend, they said, was the main factor affecting the dollar-shekel exchange rate at the moment.
"After a drop at the opening of the trading week, the dollar-shekel regrouped over the past day and is trading with almost no change as the Bank of Israel puts the brakes again on the appreciation of the shekel,” a source in the research department said.