Bank of Israel to buy $3.5B in 2014
Purchase aimed at offsetting natural gas production's estimated effect on balance of payments. This year, central bank set to buy some $2.1 billion
The purchases are aimed at offsetting the estimated effect of natural gas production from the Tamar reserve on the balance of payments.
The central bank's exact volume of purchases next year has yet to be determined, but according to estimates it will total some $3.5 billion compared to $2.1 billion the Bank of Israel is expected to buy this year.
The bank noted in a statement that the dollar purchase program was is an additional instrument of the central bank's monetary policy and exchange rate policy, which is consistent with it.
"As in the past, the Bank of Israel will continue to operate in the foreign exchange market in situations of exchange rate fluctuations which are not in line with fundamental economic conditions or when the foreign exchange market is disorderly," the bank said.
According to the plan, the foreign currency purchases are expected to continue till 2018, and the Bank of Israel plans to calculate the expected improvement in the balance of payments as a result of the gas production on an yearly basis.
The production expenses and other expenses of the companies in the gas industry will be deducted from this sum, at a total rate of 25%.
The balance received will be the amount of dollars the bank will purchase that year. The 2014 amount is expected to be bigger than in 2013 as this year the gas production will only last three quarters, while in 2014 it will spread over an entire year.
