Shekel Weakens as Israeli Government to Central Bank Buy Dollars

Israel’s shekel weakened for the first time in three days as the government and central bank bought more than $300 million to curtail the biggest two-day appreciation since 2009.

The shekel fell as much as 1.2 percent to 3.9666 per dollar following the interventions, which came after the Bank of Israel spurred gains in the currency by refraining from cutting interest rates on March 23. Policy makers are trying to weaken the shekel as the country contends with deflation amid a drop in global commodity prices.

The central bank bought about $300 million in two transactions on Wednesday, according to Yariv Shalev, a currency dealer at Mercantile Discount Bank Ltd. in Tel Aviv. The Finance Ministry purchased tens of millions of dollars in its second day of interventions, according to a person familiar with the details, who asked not to be identified because they weren’t authorized to speak publicly.

“The Bank of Israel bought about $150 million and it didn’t work out,” Shalev said. “Then it came back and we saw the shekel weaken some.”

The currency lost 0.9 percent to 3.9562 per dollar by 6:19 p.m. in Tel Aviv, making it the third-worst performer on Wednesday among 31 major currencies tracked by Bloomberg. Bank of Israel spokesman Yoav Sofer declined to comment when reached by Bloomberg.

Annual consumer prices dropped for a sixth month in February, by 1 percent from a year earlier. The central bank bought more than $1 billion that month, the most in seven months, according to Bank of Israel data.

The Finance Ministry reported its first hedging transaction this year on Tuesday, after purchasing $1 billion in 2014.

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