Fighting back: As expected, the Bank of Israel announced an intervention program in the foreign exchange market, as part of the sale of dollars of up to $30 billion. Trading in the foreign exchange market opened with the dollar trading above NIS 3.90, a depreciation of the shekel by 1.65%.
Although this is a sharp depreciation, it is less than the exchange rate derived from the foreign exchange options yesterday—NIS 3.95. According to many estimates, the dollar exchange rate was expected to break the NIS 4 per dollar threshold. The Bank of Israel, it should be recalled, has foreign exchange reserves totaling more than $200 billion, so this is a necessary step that may moderate the depreciation of the shekel slightly.
The Bank of Israel's announcement stated that "the Bank will act in the market in the near future to the extent necessary in order to moderate fluctuations in the shekel exchange rate and to provide the liquidity required for the continued orderly activity of the market."
In addition to the $30 billion plan, and if necessary, the supply of liquidity to the market will also be carried out by operating the Bank's swap transaction mechanisms in the market in the amount of up to $15 billion. "The Bank of Israel continues to monitor developments, monitors all markets, and will act with the tools at its disposal as needed," the statement said.
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