Exporters Shudder at Strongest Shekel Ever


The Bank of Israel has declared the shekel to be at its strongest position ever measured against the basket of currencies of the country’s major trading partners, Globes reported on Thursday.

The BoI set the representative shekel-euro rate Thursday at NIS 3.695/€, down 0.295% since the day before, and putting the shekel at its strongest against the euro since 2001. The shekel-dollar representative rate was set 0.188% lower, at NIS 3.185/$, the shekel’s strongest level against the dollar in over 10 months.

Whether this is good news or bad news depends, of course, on where one stands in the marketplace.

Israeli exporters shuddered.

As Prico Risk Management and Investments CEO Yossi Fraiman said, “This is not good news for exporters working on small margins. Among the reasons for the shekel’s strength is lively activity on the part of financial institutions reducing their currency exposure, resulting in surplus supply of foreign currency.

Israeli companies that held public offerings on overseas markets together with foreign investment bodies operating on the bond market have also created a large supply of foreign currency. On top of these two significant factors, exporters receiving currency for their exports need shekels to make upcoming salary payments.”

Fraiman added, “The strengthening of the shekel encourages imports from Europe, and that is very problematic. European imports represent 27% of Israeli imports, compared with the dollar which represents 20%. This encourages trade with the European countries, China and Japan. At the same time, the appreciation has eased the upward pressure on prices, and reduced Israel’s inflation compared with the world,” Globes quoted him as saying.

Marian Cohen, president of the High-Tech Association of the Manufacturers Association, identified high-tech among the victims of the strong shekel: “The constantly strengthening shekel against the dollar and the euro hurts Israel’s high-tech industry. The industry is not just built on a small number of startups that raise or are sold for astronomical sums, but mainly consists of exporting companies that provide a living, considering those directly affected alone, to over 370,000 households in Israel, and support the economy of the country. The high-tech industry accounts for more than half of Israel’s exports, and industrialists are the first to be harmed by the appreciation of the shekel.”