For the first time since 2022, the Bank of Israel intervened in the foreign exchange market, buying $801 million in May in a bid to curb the sharp appreciation of the shekel, according to the central bank’s monthly foreign exchange reserves report.

The bank said the purchases in May were aimed at maintaining the “orderly functioning of the markets.”

The move comes as a host of business leaders and policymakers have criticized the central bank’s reluctance to act, saying​ the recent 33-year high in the shekel versus the dollar is harming exports, a major growth engine of ​the economy. The strength of the local currency is forcing exporters and startups to make tough decisions about hiring abroad and moving R&D centers out of Israel, stirring fears about future economic growth.

“Despite the central bank’s adamant policy until now, the Bank of Israel is showing some flexibility to stem the appreciation of the shekel,” Leader Capital Markets chief economist Jonathan Katz told The Times of Israel. “With this move, the central bank indicates that we could see more purchases in the foreign exchange market.”

The central bank does not specify the exact timing of the purchases. But market observers estimate that the foreign exchange intervention took place at the end of May as the shekel briefly strengthened below NIS 2.80 per dollar, trading around a 33-year high against the greenback.

The central bank’s foreign currency intervention appears to have helped weaken the shekel by 4.6 percent against the dollar last week. The local currency is trading around NIS 2.94 per dollar as of Friday. There is no foreign currency trading on Sundays.

“Against the backdrop of the sharp decline in inflation expectations in the last two weeks, and the continued strengthening of the shekel (until last week), we estimate that the Bank of Israel continued to purchase foreign exchange in early June,” said Bank Hapoalim chief strategist Modi Shafrir.

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