JERUSALEM (Jun. 22)
For the third time in as many weeks, the Bank of Israel devalued the shekel, this time by approximately 4.4 percent.
The move on Thursday was approved by Finance Minister Shimon Peres and hailed by the Manufacturers Association, but was criticized by Histadrut, the trade union federation.
The central bank set the new exchange rate at 2.0649 shekels in relation to a “basket” of foreign currencies. But it will be allowed to fluctuate by 3 percentage points, up or down.
Michael Bruno, governor of the Bank of Israel, denied that the latest devaluation was necessitated by large-scale speculation in foreign currencies.
It was planned two weeks ago as part of the government’s efforts to stimulate exports, he said.
He conceded the devaluation would probably raise the price of imports, and possibly of locally made products.
But with an economic recession and an unemployment rate of 8 percent, demand is low and “devaluation has a better chance of success,” Bruno said.