December 8, 2014 / 9:48 AM / 3 years ago

Bank Hapoalim chairman says no more Israeli rate cuts needed

TEL AVIV, Dec 8 (Reuters) - Further reductions in Israeli interest rates are no longer needed as the government’s target to weaken the shekel to help exporters has been achieved, the chairman of Israel’s biggest bank, Hapoalim, said on Monday.

The dollar has advanced close to 18 percent against the shekel since July, hitting a more than two-year high of nearly 4 shekels per dollar on Monday.

“The target of the shekel’s depreciation has been achieved and this is expected to improve export data,” Yair Seroussi told a business conference. “In light of this, the debate over lowering interest rates (further) needs to be taken off the agenda.”

The strength of the shekel in recent years has weighed on exports, which account for about 40 percent of Israel’s economy. The Bank of Israel has bought more than $56 billion of foreign currency since 2008 in an attempt to weaken the shekel but in recent months the depreciation accelerated as U.S. economic growth picked up and Israeli growth slowed.

The weaker shekel is expected to help boost Israel’s economy, which is forecast to grow only 2.2 percent in 2014, down from 3.2 percent in 2013.

The Bank of Israel held its benchmark interest rate at an all-time low of 0.25 percent at its last three decisions after rates were reduced in July and August to support economic growth. (Reporting by Tova Cohen; Editing by Steven Scheer)

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