Bank of Israel purchases $6.8 billion of forex in January, reserves reach new record

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The Bank of Israel reported on Sunday it purchased $6.832 billion of foreign currency in January, propping in weakening the shekel from a 24-year peak and taking forex reserves to a new record high of $179.5 billion.

After purchasing $21 billion of foreign currency last year, the central bank said in January it would purchase $30 billion of forex in 2021 to try and halt the shekel's appreciation. On January 14, the shekel reached 3.11 per dollar, its highest since 1996. Through the Bank of Israel’s action, it has softened to 3.29 per dollar, albeit the central bank believes that part of the shekel's strength stems from a weak dollar globally.

Aside from the softening dollar, policymakers also highlighted the strong foreign investment flows into Israel plus the surplus of current account and hopes on coronavirus vaccine rollout leading to a faster economic rebound.

The central bank furthered it also bought 4.2 billion shekels ($1.3 billion) of Israeli government bonds in January to bring its total since March to 50.4 billion shekels. Its balance of corporate bond purchases was kept at 3.5 billion shekels.

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