The Bank of Israel on Thursday reported a record loss of NIS 17.9 billion (about $5 billion), with NIS 17.6 billion resulting from exchange rate differences.
According to data released by the central bank on its activity over the past year, its assets were reduced by nearly NIS 18 billion as a result of foreign exchange purchases and fluctuations in exchange rates.
The Bank of Israel stated, however, that the loss was only “on paper” and that changes in the exchange rates could regain the lost sum.
In 2009, the Bank of Israel had a profit of NIS 1.4 billion ($380 million).
According to the figures released Thursday, the bank’s salary expenses were significantly reduced in 2010. The expenses for the Bank of Israel’s 1,600 workers and pensioners totaled NIS 450 million ($123 million) last year compared to NIS 804 million ($220 million) in 2009.
The data also revealed that the Bank of Israel’s balance sheet grew by 8.6% last year, totaling NIS 274 billion ($75 billion).
(Source: Ynet)
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2 Responses
The claim “that changes in the exchange rates could regain the lost sum.” is speculation. One can can also claim that there has been a permanent loss in value of the dollar as well as permanent gain in the shekel. In fact the Israeli economy has been upgraded to a developed economy therefore its currency should also appreciate in absolute terms.
In addition the Bank of Israel is effectively acting as a taxing authority and giving subsidies, especially in regards to foreign trade. There should be a Knesset discussion on that.
Bank of Israel has done a terrific job of managing through the crises. It’s not their fault the dollar and some European currencies have been so heavily devalued.