By Tova Cohen TEL AVIV, Oct 19 (Reuters) - The Bank of Israel bought over $200 million in foreign currency early on Monday to slow the shekel's appreciation against the dollar, dealers said. The Bank of Israel intervened,' a dealer at Israel Discount Bank told Reuters. Another dealer said the central bank bought only in the morning and stayed out of the market the rest of the day. The central bank stepped in as the dollar slipped below 3.70 shekels in early trade. After the intervention, the dollar reached as high as 3.7170 shekels before giving up some of its gains later in the day. The shekel's official rate was set at 3.7080 per dollar, barely changed from Friday's rate of 3.7090. The central bank last intervened on Oct. 15, when it bought at least $100 million after the dollar dipped below 3.70. With the dollar weak around the world, the Bank of Israel is trying to keep the shekel from appreciating too fast since a strong shekel hurts Israeli exports, which account for nearly half of economic activity. Exports have already been damaged by the global recession. In August, the central bank halted a more than year-long programme of buying $100 million a day of forex and instead said it would enter the market on days of unusual activity. The Bank of Israel said on Sunday it did not target a specific dollar-shekel rate, and that its currency interventions were exceptional responses to the global crisis to keep the shekel in equilibrium. 'We regard the current period of intervention in the foreign exchange market as exceptional, a result of the not yet ended global crisis,' it said. 'We expect that the market will return to a situation closer to that of 1998-2008, when the Bank of Israel did not intervene at all in the foreign exchange market -- or at least, that the need to intervene will occur only rarely, in exceptional circumstances.' Last Thursday the Central Bureau of Statistics announced that the consumer price index for September fell by a more than expected 0.3 percent, standing 2.8 percent higher over the past 12 months. High inflation had prompted the central bank to raise its key lending rate by a quarter-point to 0.75 percent in August but easing inflation expectations led the Bank of Israel to keep rates steady last month.

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