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Peres, in Surprise Move, Announces 5 Percent Devaluation of the Shekel

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Shimon Peres started his tenure as finance minister with a surprise 5 percent devaluation of the shekel on Tuesday.

It was considerably less than the widely anticipated 15 percent devaluation, said to be favored by the Bank of Israel, the country’s central bank.

In fact, the move is a minor alteration. It now takes 1.68 shekels to buy a U.S. dollar, compared with 1.59 shekels before Tuesday.

An official announcement said the decision to devalue now was reached jointly by the finance minister and Bank of Israel Governor Michael Bruno.

Economic observers said it was intended to stem the rush to buy foreign currency, which peaked over the weekend as rumors flew that a major devaluation was imminent.

But it might not have that effect. The devaluation is not part of the comprehensive economic program Peres is expected to present shortly. The public, therefore, expects further devaluations and will continue to buy dollars, the observers said.

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