“The Bank of Israel buys time”

It was a stormy session in the foreign exchange market this morning after yesterday’s peak in the US stock market and the benchmark Bitcoin price. After the Bank of Israel used about a quarter of its foreign purchasing plan for 2021 in January, Bank of Israel Governor Amir Yaron clarified earlier this week that the program could exceed the $ 30 billion planned. However, the assessment in the market is that although the Bank of Israel is expected to weaken some of the forces that tend to increase the value of the shekel, in the long run, the underlying forces (such as: the current account surplus and stock offerings by Israeli companies abroad The acquisition of Israeli companies by foreign companies, and direct investment inward) still supports the continuation of appreciation. The price of the shekel against the dollar is currently down by 0.81% compared to the representative price yesterday, at 3.2553 shekels / dollar, and the shekel price against the euro has decreased by 0.25% at 3.9391 shekels / euro. Kobe Levy, head of market strategy at Bank Leumi (TASE: LUMI), told “Globes”, “The US dollar has done things at home and abroad, but what we are seeing at the moment is not a matter of what is happening with the dollar but with the rise of the shekel. The flood has already begun.” The sale of the dollar yesterday.Most of the market realizes that this is the new normal and is ready to sell at these rates, but the Bank of Israel was compensating for that. The open question is whether it will succeed in keeping pace with this pace for the rest of the year. The main forces in the market support the appreciation of the shekel while The Bank of Israel is against them with huge and correct moves. I see the Bank of Israel buying time for the private sector in Israel by buying foreign currencies; the question is whether the Bank of Israel’s decision will be sufficient. Sellers sell more foreign currencies than they buy the shekel. I saw this development in the market in a month. In the past, and you have to look at who helped the shekel reach 3.30 shekels / dollar – the answer is the Bank of Israel, when it announced its program to buy foreign currencies for 2021. It must be emphasized that it is at least $ 30 billion. This is what the governor said yesterday. Deputy A. Governor Andrew Abeer said this to him, and this is what happened in the past: The governors of the Bank of Israel ended the year above the level set at its inception. In January alone, the Bank of Israel bought about 20% of the total, which means it may quickly reach the share it has set. Israel has a current account surplus of $ 20 billion, which means that a lot of the money that the Bank of Israel will invest will be matched by this influx, but $ 30 billion will not be enough, if we assume that, and Levy said that the flow of foreign currency to Israel will continue at the same rate. Relevant portfolios of the investment bank: We can expand the scope of buying foreign currencies “from a technical point of view,” and he continued, “The situation that has been created is that those selling dollars are willing to do so at 3.30 shekels / dollar. The Bank of Israel has bought, and those selling it are mainly local players. The higher the exchange rate, the more dollar sellers there are, and there is a level at which there are not enough buyers. 3.30 NIS / USD has become the new normal. ”Posted by Globes, Israel business news – en.globes.co.il – February 9, 2021 © Copyright Globes Publisher Itonut (1983) Ltd. 2021