The Bank of Israel announces plan to increase foreign exchange reserves by 10 billion dollars over the next two years by purchasing approximately 25 million dollars per day in the market, beginning 24/3/08

20.3.2008
 
The Bank of Israel announces plan to increase foreign exchange reserves by 10 billion dollars over the next two years by purchasing approximately 25 million dollars per day in the market, beginning 24/3/08
 
 
 
The Bank of Israel announced yesterday that it plans to increase its foreign exchange reserves by purchasing foreign currency in the open market, effective Monday March 24 2008.
Following a thorough review of its reserves management policy, the Bank of Israel has identified a level of $35-40 billion in foreign exchange reserves as being appropriate to the needs of the rapidly growing Israeli economy and its increasing integration into the global economy and global financial system.
The Bank notes that current market conditions allow it to increase its reserves in a prudent manner, consistent with the Bank’s interest rate policy while reinforcing the stability and resilience of the financial system and the economy. The purchase of foreign exchange by the Bank will be conducted so as to avoid any inappropriate impacts on the exchange rate and to minimize interference with the market mechanism.
The Bank of Israel will add 10 billion dollars to the reserves over the course of approximately two years through regular purchases of approximately 25 million US dollars per business day. The Bank’s daily purchases will be small compared to average daily volume in the Israeli foreign exchange market, currently over two billion dollars daily. The program will be reviewed periodically to take into account changing market conditions.
The Bank of Israel emphasizes that the program to increase foreign exchange reserves involves no changes to the Bank's policy goals – maintaining price stability and subject to that, supporting the economic policy of the government – promoting growth and employment and supporting financial stability. The program does not change the investment policy of the foreign exchange reserves.