Israel’s financial leaders said today that devaluation of the French franc would have no affect on the Israeli economy and that Israel has no intention of devaluing its own currency. Finance Minister Zeev Sharef and David Horowitz, Bank of Israel Governor, discussed France’s monetary action in radio and press interviews.
They noted that Franco-Israeli trade is relatively small and that Israel’s foreign currency reserves are in dollars, not francs, so that there is no reason for devaluation. Israeli financial circles nonetheless were closely watching British reaction to the French devaluation. Israel’s economy is closely linked to the pound sterling. But economists are divided over whether Israel would be forced to devalue its pound in response to a devaluation of British currency. The last time the pound sterling was devalued, Israel promptly followed suit. The pound sterling stands at $2.40 at the present rate of exchange. The Israel pound is about 33 cents.
A slight increase in the price of black market dollars was registered yesterday in the wake of the French devaluation but the financial market showed no signs of concern. The Bank of Israel instructed all other banks not to deal in French francs today as a precautionary measure. But the ban was not applied by the Haifa port branch of the Bank Leumi which exchanged the francs brought by a group of French tourists who arrived for a two-week visit. A bank spokesman said, “We didn’t want to spoil their holiday.”
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