Foreign exchange reserves reached a new high of $ 142.5 billion

The Bank of Israel updated that as of May 2020, foreign exchange reserves reached a new high of $ 142.5 billion (about 35.5% of GDP) - an increase of about $ 9 billion compared to the end of April.
Most of the increase in the foreign exchange reserves held by the Bank stems from the government transfers (following the borrowing of overseas bonds held by the Bank), which amounted to more than $ 5 billion. In addition, the Bank of Israel purchased $ 2.6 billion and recorded an increase of $ 1.7 billion following the rise in rates. At the same time, the bank transferred about half a billion dollars to the private sector in order to maintain liquidity in the markets.
In a monthly report on the relief programs with which the Bank emerged following the Corona crisis, the total balance of repo transactions (which allow entities to borrow from the Bank of Israel against bonds) stood at NIS 1.6 billion at the end of May (compared with NIS 1.8 billion at the end of April and NIS 5.5 billion at the end of March). This means that the financial institutions in the market needed assistance from the Bank of Israel in May to the same extent as given in April to maintain their liquidity (significantly less than March).
As part of the dollar-shekel transactions that are supposed to maintain the availability of the dollar, the total balances stood at $ 6.8 billion (compared with $ 7.5 billion at the end of April). Total government bond purchases were NIS 19.2 billion, NIS 6 billion higher than at the end of last month.
The foreign exchange reserves have a number of objectives: First, they provide the foreign exchange emergency stock with a volume that needs to be sufficient for a time of crisis.
In the event of a major war or earthquake, for example, the foreign exchange reserves could be used for more realistic assistance. At such a time, massive imports could be accompanied by a slowdown in exports - so foreign exchange revenues would be low and foreign exchange reserves would remain the country's main source of funding.
The Bank of Israel purchases foreign currency, among other things, to offset the effects of speculators on the shekel in order to maintain the "real" value of the shekel against the dollar.