Bottom line: Overall, foreign currency reserves increased by $1.4bn in January – the most in a single month since August, but not much more than December’s $1.2bn. This cumulative $2.6bn rise, most of it from intervention by the Bank of Israel, did not stop the shekel from rising against almost all currencies in December and January, but it may have contributed to the reversal that has occurred in February.
- The scale of central bank intervention in January was actually larger than the rise in the reserves. The Bank of Israel acquired $1.73bn worth of foreign currency in the market during January.
- The $1.4bn rise in reserves January seems large, but in fact it is much less than the rise in any of the previous three Januaries.
- In 2012 and 2013, the rise in reserves in January was BY FAR the largest of any month in those years. In 2011 it was the second-largest rise.
- There are various factors involved in this pattern, not always the same ones. The phenomenon of large-scale intervention in January requires further analysis.
- As of end-January, the basic reserves – excluding the Bank of Israel’s reserves at the International Monetary Fund and the 9separately-managed) reserves bought under the ‘gas program’, to offset the impact of natural gas production on the balance of payments – totaled $81bn. This is the first time that the basic reserves have exceeded $80bn. Total reserves (including the items noted) crossed the $80bn mark in October 2013.
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Bank of Israel’s foreign currency reserves
Monthly change ($mn), January 2010 – January 2014