In theory, his departure came after a disagreement over currency reform. But Israeli commentators have no doubt that the Prime Minister wanted to get rid of a long-term rival.
Once again Mr Netanyahu has underlined his ruthlessness and effectiveness in disposing of enemies. A shocked Mr Meridor, a leading member of the Likud party, said the Prime Minister had suddenly developed an intense interest in the extent to which the shekel, the Israeli currency, will be allowed to float. Rejecting a compromise worked out with the Bank of Israel, Mr Netanyahu insisted on a cabinet vote, which went against Mr Meridor.
Had Mr Meridor resigned two months ago, when police called for the indictment of the Prime Minister over the appointment of Roni Bar-On, one of his political cronies, as the attorney- general, Mr Netanyahu might have suffered serious political damage. But the departure of the Finance Minister now, probably to be replaced by Ariel Sharon, the Infrastructure Minister, or by Yaakov Neeman, a former Justice Minister, is something that Mr Netanyahu can afford to take in his stride.
The timing of Mr Meridor's resignation confirms the impression that he has poor judgement. At the time of the Bar-On affair, few of Mr Netanyahu's cabinet came out in his support. The scandal was laid to rest last Sunday when the Supreme Court rejected petitions against the decision by the attorney-general not to prosecute the Prime Minister.
Mr Netanyahu appears to have decided to move immediately against Mr Meridor. He may also have decided to target other members of the cabinet suspected of disloyalty during the scandal.
Mr Netanyahu is looking more secure than at any time during his first year in office. He has his cabinet under control. Confrontation with Yasser Arafat, the Palestinian leader, over building a new Jewish settlement at Har Homa, in Jerusalem, has not provoked widespread violence. US support for Israel has not faltered and the anger of Arab states has proved ineffectual.