In Brief : Israelis Halt Foreign Currency Sales
Israeli central bank took the unusual step of halting sales of foreign currency today after a speculative rush out of the shekel drained the nation’s reserves of more than $300 million in a week.
The Bank of Israel said foreign exchange trading would cease until Tuesday at the earliest, and Israeli media predicted that the Finance Ministry would devalue the shekel by up to 10% on Sunday, the second devaluation in a week.
“The Bank of Israel will not buy or sell foreign currency for shekels from accredited banks,” a statement said. “Therefore the Bank of Israel will not publicize the representative exchange rates for today.”
Many Israelis have been buying dollars as a hedge against what they expected would be a major shekel devaluation as part of the economic recovery program.
The Cabinet is due to discuss an economic austerity package on Sunday. Finance Ministry sources said it would include a billion-shekel ($600-million) cut in the 1988-89 budget, an increase in the prices of services and subsidized goods and a freeze on other prices.
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