Israel’s shekel gained for a second day after Leonardo Leiderman, chief economist of the country’s largest bank, was nominated as the next Bank of Israel governor.
The shekel strengthened 0.1 percent to 3.5622 a dollar, headed for the highest close since July 16, at 5:28 p.m. in Tel Aviv. The currency, which appreciated 2 percent in July in the biggest monthly advance this year, is also the best performer among 31 major currencies tracked by Bloomberg this year.
Leiderman, 62, chief economist at Tel Aviv-based Bank Hapoalim Ltd., was picked to succeed Stanley Fischer, who stepped down June 30. First-choice Jacob Frenkel withdrew his candidacy this week. Interim Governor Karnit Flug immediately resigned after being passed over for a second time by Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid.
“The quick nomination is a relief to the market, removing uncertainty after the withdrawal of Frenkel,” said Sagie Poznerson, head of trading at Leader Capital Markets in Tel Aviv. “Leiderman has a good track record of monetary theory and has worked within the central bank before.”
Leiderman, former head of the central bank’s research department, must still be vetted by a panel that reviews senior civil appointments, and the cabinet. Frenkel’s nomination snagged while the committee was reviewing his candidacy after Haaretz newspaper reported that seven years ago he was briefly detained in Hong Kong after allegedly leaving an airport shop with an item that had not been purchased.
The Bank of Israel this week kept interest rates at 1.25 percent. In May, the regulator lowered the benchmark rate by 0.5 percentage point in two cuts aimed at trimming the shekel’s advance and supporting the economy, which relies on exports for about 40 percent of output.
The nominee signaled that stimulating the economy was his top priority. Leiderman plans to chart a policy that will focus on growth and not just price stability, he said in an interview published today in the Yediot Aharonot newspaper.
Economic growth will probably slow to 3.2 percent in 2014 from 3.8 percent this year, the central bank said June 24. Indicators suggest “continued growth of economic activity at the relatively moderate pace of the past two years, which eased concerns of an additional slowdown,” the central bank said this week.
The yield on Israel’s benchmark 4.25 percent bonds maturing in March 2023 gained five basis points, or 0.05 percentage point, to 3.8 percent at the close in Tel Aviv, taking its advance this week to seven basis points, according to data compiled by Bloomberg.