Shekel Drops Most in Three Weeks as Central Bank Seen SellingShoshanna Solomon
Israel’s shekel depreciated the most in three weeks as Forex Capital Markets and Bank Leumi said the Bank of Israel bought at least $100 million to curb its rally.
The shekel weakened 0.5 percent, the most since Dec. 11, to 3.4910 a dollar at 5:31 p.m. in Tel Aviv. Central bank spokesman Yoav Soffer declined to comment when contacted by e-mail by Bloomberg News.
“We haven’t seen such high volatility in several months, which strengthens our estimates of an intervention,” Forex Capital Markets LLC’s Chief Executive Officer Tal Zohar Avda said by phone today. “To create such a big move, we estimate the Bank of Israel would’ve had to intervene for at least $100 million.”
The currency’s strength has hurt exports that account for about a third of the country’s economic output, the Finance Ministry said in November, and manufacturers have urged the government to bring the exchange rate to 3.8 shekels a dollar to promote growth. The central bank bought $4.7 billion of foreign currency from April to November in its first purchases in almost two years and cut interest rates by 0.75 percentage point this year to 1 percent to stem the shekel’s advance.
“This is good for exporters and for the economy but this dollar-buying is also costing the economy,” Rony Gitlin, head of spot trading at Bank Leumi Le-Israel Ltd., said by phone today, referring to the lower interest rates earned on dollars held versus shekels.
Broader intervention in the Israeli currency market would require cooperation between the Finance Ministry and the Bank of Israel, Alex Cukierman, an external member of the central bank’s monetary policy committee said last month. Finance Minister Yair Lapid has promised to work with Bank of Israel Governor Karnit Flug to try to tame the currency.