Israeli Pound Devalued Again

“Creeping devaluation” crept inexorably further last night when the Israel Pound was reduced in value by another 1.9 percent. The Pound now stands at IL 7.38 to the U.S. dollar, compared to IL 7.24 before the latest devaluation.

The latest depreciation was announced at midnight by the special ministerial committee that was authorized last June to devalue Israel’s currency at a rate of up to 2 percent every 30 days if considered necessary. The purpose is to stem, inflation and aid Israel’s exports. The prices of basic commodities, fuel and transit fares are not expected to rise as an immediate result of the latest devaluation.

Arnon Gafni, director general of the Finance Ministry, disclosed last night that “creeping devaluation” will be reviewed shortly to evaluate its results to date. It was learned that two modifications are under consideration. One would link the Pound to a variety of foreign currencies. It is presently linked to the U.S. dollar. The other would permit the special ministerial committee to impose devaluation at less than 30-day intervals.

In addition to the devaluation, a levy of slightly less than 2 percent will be imposed on foreign currency held by commercial banks, though not on private depositors of foreign currency. Gafni noted that since the last devaluation Jan. 4, the dollar rose slightly on the international money market in relation to the major European currencies. Asked if the prices of government subsidized commodities will go up before April when the government’s new austerity economic program takes effect, Gafni said that according to agreements with Histadrut no such changes will be made.