Israel’s production of natural gas is having an impact on the local economy: “As it announced May 13, 2013, the Bank of Israel, announces it will purchase $1.5 billion in 2017 to offset the effect of natural gas production,” the BOI said in a statement on Monday (Nov 14).
The purchase of foreign exchange in the coming years is in line with the estimated effect of natural gas production on the balance of payments, the Bank explained.
The Bank’s assessments of the total impact on the balance of payments resulting from natural gas production and the foreign exchange purchases is to be updated periodically and reported to the public. The Bank of Israel projected the overall effect of natural gas production on the balance of payments in 2017 will be $1.5 billion. The BOI said it would therefore purchase foreign currency during 2017 accordingly.
The projection has been affected by, among other factors, the drop in global energy prices, which decreases the effect of natural gas production in Israel on the exchange rate. The Bank said its purchase program is an additional instrument of the BOI’s monetary policy and of exchange rate policy with which it is consistent.
The Bank of Israel said it will continue to operate in the foreign exchange market in situations of exchange rate fluctuations which are not in line with fundamental economic conditions, or when the foreign exchange market is disorderly.