Rush to Buy Foreign Currency Appears to Have Been Stemmed

The rush on banks to buy foreign currency appeared to have been stemmed today by government assurances that it would support the Shekel.

Today’s sales amounted to some $4 million cash for currency and a similar amount for local Dollar savings accounts. The banks estimated that this was about half the amount purchased yesterday when the demand for foreign currency outpaced supply in many banks.

The foreign currency scare was triggered by expectations that the government would order a sharp new devaluation of the Shekel which has been devalued twice in recent weeks.

The heads of commercial banks were scheduled to meet later today with Moshe Mandelbaum, Governor of the Bank of Israel, to discuss the situation. The opposition has already seized upon it to blast the Likud government. Labor MK Gad Yaacobi, chairman of the Knesset’s Economic Committee, called a press conference today to warn that the new Likud-led coalition would pursue the same disastrous economic policies as the outgoing one.

“The government expects the people to believe that it is capable of introducing the needed changes,” Yaacobi said. But the present economic deterioration will continue “unless both the Knesset and the people sober up and prevent a continuation of that policy,” he warned. He urged the Knesset therefore not to approve “the establishment of the new government, come next Monday.”