Changes in the composition of the currency basket



May 2, 2000


The Foreign Currency Department of the Bank of Israel announces that the composition of the currency basket was changed today.

Composition of currency basket on May 2, 2000 (by currency units)

Dollar
Euro
Sterling
Yen
Composition of basket following the change
0.6698
0.2493
0.0453
7.2411
Composition of basket before the change
0.6741
0.2282
0.0589
6.5437


Composition of currency basket on May 2, 2000 (percent)
Dollar
Euro
Sterling
Yen
Composition of basket following change
64.75
21.97
6.84
6.44
Composition of basket before the change
65.17
20.11
8.90
5.82
Change
-0.42
1.86
-2.06
0.62


Routine annual calculations made by the Foreign Currency revealed that the difference between the share of the pound sterling in the currency basket - according to which the exchange - rate band is defined - and its share of Israel’s foreign trade in 1999 (imports and exports of goods and services, excluding diamonds) is more than 2 percentage points. Consequently, the composition of the currency basket, i.e. the number of units of each currency in it, was adjusted today.

The Foreign Currency Department notes that the basket is defined in terms of fixed units of each currency, so that the weight of each currency in the basket changes in accordance with international exchange rates.

In 1995 the Bank of Israel decided, in consultation with the Ministry of Finance, to update the composition of the currency basket annually, on the 30th April, doing so on the basis of the currency composition of trade in the preceding year. If a gap of at least 2 percentage points emerged between the weight of one (or more) of the currencies in the basket and its average share of trade, the composition of the currency basket would be changed to bring it into line with the composition of trade.