JERUSALEM: The Bank of Israel said on Monday it bought $2.99 billion of foreign currency in May to help bring its forex reserves to a record $198.35 billion.

The reserves, which represent 48.3% of Israel's GDP, grew $4.35 billion last month, the central bank said.

In January, it said it would buy $30 billion of foreign currency in 2021 to try to stem the shekel's appreciation, after buying $21 billion in 2020.

Since then, Bank of Israel Governor Amir Yaron has said purchases could exceed $30 billion this year. It has bought about $22 billion of foreign currency in the first five months.

The shekel hit 3.11 per dollar on Jan. 14, its strongest since April 1996. With the help of the central bank's intervention, it has since eased back and remained steady between 3.24 and 3.30.

Policymakers have cited as reasons for the shekel's strength the global weakness of the dollar, strong foreign investment flows into Israel, a wide current account surplus and optimism that a rapid COVID-19 vaccine rollout will quickly lead to an economic recovery after three lockdowns.

The central bank also said it bought 3 billion shekels ($924 million) of Israeli government bonds last month to bring its total since March 2020, when it began the program, to 65.3 billion shekels. Its balance of corporate bond purchases held steady at 3.5 billion shekels.

The Bank of Israel has said it would buy up to 85 billion shekels worth of government bonds.

As part of a plan to encourage credit to small businesses, the bank said it loaned another 2.6 billion shekels to the banking system last month to bring its loan total during the COVID-19 pandemic to 34.2 billion shekels.