By Steven Scheer
JERUSALEM (Reuters) – The Bank of Israel said on Tuesday it bought $4 billion of foreign currency in November, its highest monthly amount since May, in a bid to contain a surging shekel.
Over the first 11 months of 2021, the central bank bought some $34 billion of foreign exchange.
In November the shekel hit a 26-year high of 3.04 per dollar, and a more than 20-year peak of 3.44 per euro. That came after a planned $30 billion forex purchase plan was reached in late October.
The shekel was the best-performing emerging currency during the pandemic, having risen as much as 10% against the dollar since 2020 on the heels of an economic rebound amid a rapid COVID-19 vaccination roll-out, a wide current account surplus, and massive foreign inflows into the high-tech sector.
It has since eased back to 3.15 per dollar and 3.55 to the euro.
Bank of Israel Governor Amir Yaron told Reuters on Nov. 23 the central bank would continue to intervene occasionally in markets to prevent big movements in the shekel, although there “is no need to announce a specific figure” in advance as it did this year.
Helped by the forex purchases, Israel’s foreign currency reserves grew by $1.3 billion last month to a record $208.8 billion, or 45.9% of gross domestic product, the central bank said.
The bank also said it bought 3.4 billion shekels ($1.1 billion) of Israeli government bonds last month to bring its total since March 2020, when it began that purchase programme, to 83.5 billion shekels.
Its balance of corporate bond purchases held steady at 3.5 billion shekels.
The Bank of Israel had planned to buy up to 85 billion shekels worth of government bonds under the programme. Last month it said it would end the bond-buying stimulus scheme by early December.
($1 = 3.1534 shekels)
(Reporting by Steven Scheer; Editing by Alex Richardson and Jan Harvey)
