Bank of Israel Partially Rescinds Ban on Foreign Exchange, Applicable to Tourists

The Bank of Israel today partially rescinded a ban it had imposed earlier in the day on the exchange of foreign currencies except United States and Canadian dollars. The move was made in order to accommodate tourists who arrived with only Swiss francs or pounds sterling in their possession and is applicable only to tourists. But a ceiling of $40 per person was placed on the amount of currency a tourist might convert to Israeli pounds for each day of his stay. There is no ceiling on dollar exchanges.

The ban on currency exchange, to remain in effect until further notice, was a result of the currency crisis in Western Europe that stems from the weakening French franc and may lead to the devaluation of the franc and other European currencies. Tourists arriving at Lydia Airport and at Haifa early today could not convert their fraces to Israeli currency because of the uncertainty of the market value of various international currencies. They were given free transportation to their hotels.

Treasury officials and Bank of Israel experts meanwhile were considering what course Israel would follow if any European currencies were devalued. It was noted that the Israel pound has always been linked to the British sterling, especially as Britain is the chief market for Israel’s number one export – citrus. Sources said Israel was not likely to devalue its pound unless Britain devalued the pound sterling. Others said that even if sterling is devalued, Israel would stick with the dollar rate which is presently 3.5 Israel pounds to $1.

Non-tourists today were prohibited from trading in foreign currencies. The Tel Aviv stock exchange was closed this morning but reopened in the afternoon for small transactions only. There was a great demand for dollar-linked bonds. There was also a heavy demand for gold and unofficial dollars on the “free market.”