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Rumors Trigger Run on Banks

The public reacted nervously this weekend as Shimon Peres took over as finance minister in the new Labor-Likud coalition government.

Israelis purchased a single-day record $60 million in foreign currency Sunday, in a rush fueled by fears of further devaluation of the shekel.

Peres has given assurances that he will not take precipitous action. As finance minister, he faces two urgent problems: The inflation rate is rising and unemployment has gone up 7.2 percent in the past few weeks.

Devaluation is one way to combat inflation, but Peres reportedly told leaders of Histadrut, the labor federation, that he would consider alternative measures.

The Bank of Israel, the country’s central bank, has been mum so far on the delicate issue of devaluation. But the bank is known to favor a 15 percent reduction of the shekel.

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