January 8, 2015 / 9:52 AM / 4 years ago

Volume in Israel's FX market jumps in 2014, foreign activity drops

JERUSALEM, Jan 8 (Reuters) - Daily volume in Israel’s foreign currency market jumped 45 percent to an average of $6.4 billion in 2014, boosted by a sharp rise in swap transactions by Israeli participants, the Bank of Israel said on Thursday.

Foreign investors accounted for 31 percent of daily volume last year, down from 40 percent in 2013 when overall daily volume fell 16 percent.

Foreigners had accounted for 63 percent of daily trade in 2010 but their participation has steadily fallen since then due to increased regulation on foreign investors.

During the year, the dollar strengthened by 12 percent against the shekel, with most of the appreciation since August. The stronger dollar-shekel was largely in line with the greenback’s gains versus the euro, Swiss franc and the average of emerging market currencies.

Against the currencies of Israel’s main trading partners, in terms of the nominal effective rate, the shekel weakened by 3.1 percent in 2014 and 5.7 percent since August.

The central bank noted that swap transactions surged 87 percent to an average monthly level of $79 billion in 2014.

The Bank of Israel itself bought $7 billion in spot and forward transactions, $3.5 billion on which were part of a programme intended to offset the effects of natural gas production in the exchange rate.

The shekels stands at 3.97 per dollar, close to a two-year low of 3.99 reached a month ago.

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here (Reporting by Steven Scheer; Editing by Toby Chopra)

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