TEL AVIV (Aug. 29)
The Israeli shekel was devalued Tuesday by about 0.8 percent, as the Bank of Israel adjusted to an unusually high demand for foreign currency, sparked by rumors that a larger devaluation was imminent.
Official demand for U.S. dollars outstripped supply by $73 million Tuesday, forcing Israel’s central bank to make a “rate adjustment” Wednesday that brought the official exchange rate to 2.015 shekels to the dollar.
Few economic analysts put much stock in Finance Minister Yitzhak Moda’i’s claim that Tuesday’s adjustment was the final monetary move contemplated. In fact, the Bank of Israel is widely expected to devalue the shekel another 7 to 12 percent shortly.
One analyst was quoted by Israel Radio as saying, “The finance minister is one of the few officials allowed to lie in public, to cover up his real thoughts and plans.”
Moda’i held lengthy meetings Tuesday with his senior advisers on the economic plan he is to present to the government. Its goal appears to be a quick increase in government revenues to offset deficit spending in the wake of the massive Soviet immigration and events in the Persian Gulf.
The measures contemplated are said to include the rumored devaluation, a reduction in the minimum wage, cuts in subsidies on basic items, an increase in the Value-Added Tax from 16 to 17 percent, higher cigarette taxes, higher luxury taxes, accelerated sale of government-owned companies and cuts in employer taxes.