While the Bank of Israel bides its time, Israeli exporters are demanding concerted intervention to reverse the sliding foreign exchange rates.
Israel’s central bank has refrained from making any foreign currency purchases in recent days, despite the fall of the shekel-dollar exchange rate to below NIS 3.70/$ and the shekel-euro rate dipping under NIS 3.90/€, on Tuesday.
Manufacturers Association of Israel president and Federation of Israeli Economic Organizations/Chambers of Commerce chairman Shraga Brosh stated the case for immediate action:
“The strength of the shekel dramatically hits Israeli exports,” Mr. Brosh was quoted as saying by Globes on Wednesday. He described its multiple impact, “both in the short term in the fall of the shekel value received for exports and in the long term due to the loss of future deals and the inability to offer attractive prices on international markets.”
Mr. Brosh called on the Bank of Israel to keep interest rates low and to resume buying foreign currency at a faster rate than before.
Israel Export and International Cooperation Institute chief economist Shaul Katznelson suggested punitive measures against those who may be exploiting the shekel’s appreciation.
“The exchange rate over the past month has not been good for exports and the effective nominal exchange rate is lower than it has ever been since it was first measured in 1999. Even in the worst-ever times we never reached such a low point as this. The strengthening of the shekel over such a short period does major harm to the worthwhileness of exports for a large section of exporters,” Mr. Katnzelson said.
“Other reasons for the appreciation of the shekel should be examined and it should be ascertained if there are other players backing the shekel such as people interested in short term financial investment. If there are such activities – then it is certainly worth considering taxing short term transactions.”
Arik Grebelsky, the owner of the limestone company A. Grebelsky & Son, which exports Jerusalem stone, put the matter in layman’s terms:
“The exchange rate is a catastrophe,” he said.