Shekel Advances as Leiderman Tapped to Head Central Bank

The shekel strengthened, extending its biggest monthly gain this year, after Bank Hapoalim Ltd.’s chief economist Leo Leiderman was nominated as the next Bank of Israel governor.

The Israeli currency rose to as high as 3.5619 per U.S. dollar after the announcement came out and added 0.3 percent to 3.5641 at 4 p.m. in New York. The shekel has rallied 4.8 percent this year for the largest advance among 31 major currencies tracked by Bloomberg.

Leiderman’s appointment was announced today by Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid in a text message, and acting Governor Karnit Flug immediately resigned after being passed over for a second time. Leiderman, 62, a former head of the central bank’s research department, succeeds Stanley Fischer, who stepped down June 30. First-choice Jacob Frenkel withdrew his candidacy this week.

“This is probably a shekel positive in a certain sense, in that by eliminating the uncertainty that existed over who will be the next governor, this is a big help,” Daniel Hewitt, senior economist at Barclays Plc in London, said in a telephone interview. “He’s a very experienced person and has a strong reputation, so I see this as a positive development.”

The Bank of Israel left the benchmark interest rate unchanged at 1.25 percent at the end of July, after lowering it gradually from 3.25 percent since 2011 in an effort to spur growth in the export-driven economy. It also announced in May that it would buy more than $2 billion by the end of the year, citing the shekel’s appreciation and the downward revision in global growth forecasts.

Before it's here, it's on the Bloomberg Terminal.