The strengthening dollar has eviscerated the value of the euro, and the pan-European currency has been falling in value and, as of Friday, for the first time, traded under four shekels to the euro. The closing exchange rate for the euro on Friday was NIS 3.987, a fall of 0.05 percent over the previous day’s level. The dollar closed at NIS 3.81.
The strengthening of the shekel versus the euro has major implications for Israel’s trade in Europe, where Israeli products have become more expensive in recent months as their price in euros increases. Unlike with the dollar, Israel does not have a program to purchase excess euros to weaken the shekel versus that currency; the weakness of the euro against the shekel is a result of its weakness against the dollar, and there is little, if anything, the Bank of Israel can do to impact that.
For Israelis, the fall in the euro’s value means that products from Europe, including vehicles, are cheaper in shekel terms. Vacationing Israelis will also benefit, as they will be able to get more euros for their shekels.
Experts said that they expected the current trends to continue; as the U.S. increases interest rates and the dollar strengthens, the euro will continue to weaken, and perhaps eventually achieve parity in its exchange rate level with the dollar.