Shekel Plunges After Bank of Israel Sets Reserve Requirement
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The shekel tumbled the most since August 2009 after the Bank of Israel set a 10 percent reserve requirement for foreign-exchange derivative transactions by non-residents to stem gains in the currency after a 7.6 percent increase last year.
The volume of foreign-exchange derivative transactions by non-residents has climbed “markedly” in the past few months, with a “significant part” of the increase in short-term instruments, the Jerusalem-based central bank said in an e-mailed statement today. The bank said yesterday it will require reports on foreign-exchange swaps and forwards of more than $10 million a day after a “marked increase” in the volume of those transactions.