Change in the composition of the currency basket

2.5.2004
 
Change in the composition of the currency basket
 
The Foreign Currency Department of the Bank of Israel announces that the composition of the currency basket was changed as follows on 30 April 2004.
 
Composition of currency basket (currency units) on 30 April 2004
  US$ euro £ ¥
After the change 0.7185 0.2228 0.0374 6.9216
Before the change 0.6698 0.2493 0.0453 7.2411
Composition of currency basket (percent) on 30 April 2004
After the change 64.52 23.92 5.93 5.63
Before the change 60.15 26.77 7.19 5.89
Change 4.37 –2.85 –1.26 –0.26
 
In the routine annual examination undertaken by the Foreign Currency Department it was found that the differences between the shares of the dollar and the euro in the currency basket on the one hand and their shares of Israel’s foreign trade in 2003 (imports and exports of goods and services, excluding diamonds) on the other were more than 2 percentage points. (The currency basket serves as the basis against which the exchange-rate band is defined.) Consequently, the composition of the currency basket and the number of units of each of the currencies it comprises were revised, as stated, on 30 April 2004.
The number of currency units that make up the basket are fixed as described above, so that their relative weights in the basket vary according to changes in their 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 30 April, on the basis of the currency composition of Israel's foreign trade in the preceding year. If a gap of at least 2 percentage points emerges 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 is changed to bring it into line with the composition of trade.