Bank of Israel Governor Amir Yaron announced that he will extend his term until at least the end of the current emergency period to help cope with the challenges to Israel’s economy as the country is in a state of war.
Yaron said he acceded to the government’s request to remain in office following the establishment of a national emergency government.
Yaron, who was due to end his term at the end of 2023, was expected to make a decision about whether he will continue with another five-year term after the Jewish High Holidays, which ended the day the war broke out between Israel and the Hamas terror group.
Hundreds of Hamas terrorists infiltrated into southern Israel and carried out a devastating assault on Saturday, killing at least 1,300 people, most of whom were civilians. Over 3,000 people have been injured and an estimated 150 people were abducted and taken to the Gaza Strip during the brutal attack.
“Due the emergency and the challenges to the Israeli economy at this difficult time, he (Yaron) accepts the request to extend his term, at least until the end of the emergency period,” the Bank of Israel said in a statement.
In the weeks before the outbreak of the war, there was much uncertainty among financial market participants over whether Yaron would request that his tenure be extended and if lawmakers would want to keep him in the job.
Yaron, who took up the post as governor in 2018, has been critical of the government’s contentious judicial overhaul proposed at the beginning of the year and has warned about its economic costs. In July, the governor cautioned that the advancement of the legislative package underpinning the overhaul has led to an increase in economic uncertainty, reflected in the “excess depreciation” of the shekel and the underperformance of the Israeli stock market versus global markets.
Since the onset of the war this week, the shekel has weakened more than 2 percent and is trading around 3.95 against the US dollar, the weakest level in more than seven years.
Concerns about sharp moves in the foreign exchange rate prompted the Bank of Israel to act swiftly and announce a plan to sell up to $30 billion in forex. With this plan, the central bank will be able to intervene in the market to “moderate volatility in the shekel exchange rate and provide the necessary liquidity for the continued proper functioning of the markets,” it said Monday.
In addition to the $30 billion program, the Bank of Israel said it would provide dollar liquidity to the market through SWAP mechanisms of as much as $15 billion. SWAP mechanisms are a form of future contracts through which two parties exchange the cash flows or liabilities from two different financial instruments.