Fischer Says Israel Must ‘Watch’ Foreign Inflows
(Corrects interest rate in major economies in last paragraph of story published Feb. 13.)
Bank of Israel Governor Stanley Fischer said the central bank is “going to have to watch” foreign inflows that have come about as monetary policies in other countries become more expansionary.
“The exchange rate has been appreciating as other countries made their monetary policies more and more expansionary and more money started coming into Israel to take advantage of the small differential in interest rates,” Fischer said at a briefing for journalists in Jerusalem. “You get about 2 percent more by putting your money in Israel. That’s something we are going to have to watch.”
Quantitative easing in U.S., Europe, and Japan supports the strengthening of the shekel, which hit a 15-month high against the dollar on Feb. 1, the Bank of Israel said in minutes of its last rate-setting meeting, released this week. The start of production from offshore natural gas reservoirs, expected this year, will also support shekel appreciation, it said. The shekel was trading at 3.687 against the dollar at 1:38 p.m. in Tel Aviv.
Fischer on Feb. 7 praised the Swiss National Bank for foreign-currency market intervention as pressure mounts from Israeli manufacturers to intervene to stabilize the shekel- dollar exchange rate. “You can fight the market, if the market wants your currency to appreciate,” Fischer said at a conference in Prague.
The Bank of Israel held its benchmark interest rate at 1.75 percent in its last decision at the end of month, its lowest in more than two years. Interest rates in the major global economies are about zero, Fischer said today.
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