The Bank of Israel's foreign exchange reserves fell by $ 5.1 billion in March

The Bank of Israel's foreign exchange reserves fell by $ 5.1 billion in March - the largest monthly decline recorded in foreign exchange reserves to date. At the end of March, foreign currency reserves stood at $ 126 billion, while at the end of February they stood at $ 131.2 billion, And in fact, they dropped to the level of reserves that the Bank of Israel had at the end of December 2019.
Almost every month, since 2012, there has been an increase in foreign exchange reserves, with the exception of a few months where there have been much lower declines. The decline in foreign exchange reserves is not surprising in light of the Bank of Israel's actions in the last month. Following the economic crisis and measures aimed at curbing the spread of the Corona, the Bank of Israel began a monthly report detailing the scope of the measures taken, with the aim of maintaining liquidity in the economy and trying to curb rising interest rates.
The sharp decline in foreign exchange reserves is mainly explained by the Bank of Israel's liquidity flow through the swap transactions. The Bank of Israel, on the other hand, made $ 974 million in March following purchases it made, in addition to $ 1.4 billion from government transfers, which deposit the bank with the funds it raises abroad.
As of March 31, the volume of repo transactions with government bonds as collateral stood at NIS 5.5 billion as of March 31 (swap transactions that allow the financial institutions to continue to hold the bonds and give them as collateral for a loan they receive from the Bank of Israel). In dollar terms over a week) - $ 7.5 billion. The volume of government bond purchases designed to maintain liquidity and interest rates was NIS 8.5 billion.

The monthly report comes a day after the Bank of Israel lowered its interest rate from 0.25% to 0.1% in an attempt to reduce credit in the economy. According to estimates from the Bank of Israel Research Division released yesterday, the economic crisis will not end soon, which may explain the estimates for the Bank's monthly reporting now. According to the Bank's forecast, most of the restrictions