Israel’s foreign exchange reserves grow despite no currency purchases
Israel’s foreign exchange reserves at the end of May 2022 stood at $199.808 billion, the Bank of Israel reports.
Israel’s foreign exchange reserves at the end of May 2022 stood at $199.808 billion, an increase of $2.178 billion from their level at the end of the previous month, the Bank of Israel reports. The level of reserves relative to GDP was 39.9%.
This increase is the result of a revaluation that increased reserves by $1.008 billion and government transfers from abroad totaling $1.272 billion. The increase was partially offset by transfers from the private sector of $102 million.
It was the fourth consecutive month that the Bank of Israel made no purchases of foreign currency, as was its practice last year, in order to moderate the strengthening of the shekel. Since the start of 2022, the shekel has weakened on its own due to global trends, although it has gained somewhat over the past month. The sharp drop in stock prices on Wall Street forced Israeli institutional investors to sell shekels and buy foreign currencies to hedge their positions abroad. The Russian invasion of Ukraine has bolstered the dollar around the world as global uncertainty rises and investors seek the safe haven of the US currency.
Last year, the Bank of Israel bought $35 billion in foreign currency to help exporters, moderating the strengthening shekel. For much of the year, the Bank of Israel purchased an average of $5 billion worth of foreign currency per month. But with the shekel weakening in 2022, the Bank of Israel only bought $356 million in foreign currency in January 2022, after buying $739 million in December 2021.
Foreign exchange reserves reached a record $208.77 billion in November 2021.
Published by Globes, Israel business news – en.globes.co.il – on June 7, 2022.
© Copyright Globes Publisher Itonut (1983) Ltd., 2022.
Bank of Israel Credit: Shutterstock