The shekel weakened significantly today against the major currencies and made purchases of foreign currency

The shekel weakened significantly today against the major currencies, while the Bank of Israel, according to estimates, makes purchases of foreign currency, in order to prevent the continued appreciation of the shekel against the dollar and the major currency basket. The dollar jumped 0.7% earlier to NIS 3.24, the euro strengthened by a similar rate to NIS 3.8, the pound rose to NIS 4.44.
Yossi Freiman, CEO of Frico Risk Management, Financing and Investments: "It was clear that the Bank of Israel would make a purchase before the dollar reached levels of NIS 3,215 and would continue to fall until the levels of early January. The bank saw the erosion in export profitability, and realized that in order to prevent the dollar from collapsing against the shekel, it must intervene. "Recently, he has intervened in very small amounts for the first few months, but as of this morning, he is making purchases."
Freiman added that "the bank wanted to bring us back to the levels that preceded the recent declines - in the direction of NIS 3.24. The bank is already before the completion of the purchases in the amount of $ 30 billion, so it will soon need to purchase additional amounts to avoid below NIS 3.20."
In mid-January this year, in order to prevent the dollar from continuing to fall against the shekel (it fell to a 25-year low when it traded at NIS 3.11), the Bank of Israel announced that it would purchase $ 30 billion this year.
The amount of the bank's foreign exchange purchases stands at more than $ 25 billion as of August, with several months left until the end of 2021, and the $ 30 billion quota is approaching. In July, the Bank of Israel purchased a relatively low amount of about $ 500 million.
In an international view, Freiman said that "all eyes are now on the Jackson Hall conference in the US - if the Fed reduces purchases, then the dollar is expected to jump, while stock markets are expected to record declines."
Senior US Federal Reserve officials will hold the Jackson Hall conference tomorrow and the day after tomorrow (online), culminating in Chairman Powell's speech on Friday. In the foreign exchange market, discussions will follow, culminating Friday in Chairman Jerome Powell's speech.
The bank may announce a closer-than-expected time (any date that precedes December will surprise) for the start of the reduction in purchases made by the bank, or for its postponement, when in the background there is a fear of an economic slowdown due to the spread of variants. The Bank of Israel will monitor the Fed's moves.