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A weaker dollar has hurt the competitiveness of Israeli industry, Manufacturers Association of Israel President Shraga Brosh said last week, estimating losses to the sector at an annual NIS 5 billion.
The shekel's value gained about 4% against the dollar over the past two months, hurting the profitability of exports, Brosh said, stressing that further weakening of the dollar would only do more damage to exporters' ability to compete abroad.
The fall of the dollar has a "critical" impact on exports because roughly 65% of Israel's foreign trade is conducted in the US currency, he explained.
"In the event that the dollar will continue displaying weakness, there is great doubt regarding the ability of exporters to succeed in expanding industrial exports by 6.5% in real terms in 2006, as the Manufacturers Association predicted at the end of 2005," Brosh said.
"If this situation persists, Bank of Israel Governor [Stanley Fischer] must lower the interest rate by 0.25% at the end of the month, in order to improve the importers' ability to compete," Brosh said.
"Since we are not able to prevent the weakening of the dollar abroad, all that we can do is to carry out intensive activity to encourage exports as a whole and small and medium [-sized] exporters in particular, while emphasizing the removal of obstacles in their path, especially in the areas of funding and marketing," he added.
Israeli companies also must be aided in international projects and tenders, a market estimated at $150 billion yearly in developed countries, as well as in other efforts to penetrate destination market, Brosh said.