Bank of Israel to increase purchase of foreign exchange amid strengthening shekel

Israel's central bank announced on Wednesday it will almost double the purchase of foreign exchange in 2014, citing need to curb the strengthening of the Israeli shekel. According to the central bank's plan, purchase of foreign currency would increase from about 2.1 billion US dollars this year to 3.5 billion dollars in 2014, the central bank said in a statement. The move is to "offset the effect of gas production" from Israel's recently-discovered gas fields of Tamar, Leviathan and Karish, the central bank explained in the statement. The central bank worries that newly discovered gas would lead to further appreciation of the shekel. This phenomenon is often referred to as "Dutch disease" after the discovery of large gas quantities in the Netherlands in the 1960s that sharply increased exports of the gas sector and strengthened the local currency but seriously harmed other fields in its economy, especially the traditional industries. Israel's two largest gas reservoirs, named Tamar and Leviathan, were discovered in 2010. Recent estimates put the gas reservoirs of Leviathan at 538 billion cubic meters. It is the largest gas field that has been discovered in the Mediterranean Sea. Karish has estimated reserves of 12.7 million barrels of condensate, a crude oil used for fuels production.