Money Shekels bills 521.
(photo credit: Courtesy)
While many Israelis will be watching the shekel’s rise against the dollar with delight as they eye their next trip abroad, the US currency’s nosedive is causing exporters and manufacturers to become increasingly concerned and frustrated.
Their anger was particularly obvious at a press conference hosted by the Manufacturers Association of Israel on Wednesday in Tel Aviv.
With a seat reserved for Finance Minister Yuval Steinitz conspicuously empty, the association’s president, Shraga Brosh, used the opportunity to accuse the government of not caring about the plight of its exporters.
He said Prime Minister Binyamin Netanyahu so far had ignored a request
made in January to hold a roundtable discussion on the exchange rate.
“If this doesn’t interest the finance minister, and if the prime
minister doesn’t think this is important enough, then we have a
problem,” Brosh said. “Instead of making it easier for exports following
the deterioration of the dollar, they increased the expenses. In the
budget they imposed on us new taxes to the value of NIS 6 billion,
including the fuel excise, municipal rates, water and others.
“We expect them to stop ignoring us in Jerusalem, for the Israeli
government to shoulder the burden of export growth – because [exporters]
are the main engine that move the wheels of the Israeli economy.”
Israel Export Institute chairman Ami Arel, who sat alongside Brosh,
echoed his remarks, saying the government needed to raise taxation of
foreign currency, to harm speculators rather than exporters.
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Industry, Trade and Labor Minister Shalom Simhon, the only member of the
government to appear at the press conference, said he had come to
listen but “not to be a punching bag.”
“I came to show solidarity and to say that we are situated in a period
of crisis,” Simhon said. “This crisis is known; the question is what do
we do about it, given that we are talking about an ongoing crisis. The
expectation is that there will be a sharing of responsibilities between
the government and the exporters. I feel that this is a just demand.”
“There is no doubt that exportation is the engine of the Israeli
economy,” Simhon said, adding that he would approach Netanyahu about
meeting with manufacturers, and that he was also ready to create a
program under his ministry’s auspices that would ease short-term pain
The dollar-shekel representative exchange rate fell to NIS 3.392 per
dollar on Wednesday, for a fall of about 12 percent since last July.
According to data given to the press by the manufacturers association,
the dollar’s 26% devaluation against the shekel since 2006 has been more
severe than its fall against other currencies.
Only the dollar’s 31% drop against the yen has been sharper, while in
the same period it has fallen 20% against the euro, 20% against the
Chinese yuan, 19% against the Canadian dollar and risen 3% against the
British pound, the data showed.
However, USG Capital senior analyst Eli Ben-David told The Jerusalem
Post Thursday that the government’s critics fail to understand that the
fiscal measures they are suggesting to tackle the shekel’s rise would
have little effect in the face of a continuing global trend, which sees
the dollar falling against all its major counterparts.
“If the government take steps that are too strong, it will harm the
attractiveness of Israel for the continuation of economic growth,” he
said, “because what will happen is that foreign investors will flee the
Ben-David suggested that exporters follow the advice of the government
and look to other markets in Asia and Europe to sell their wares, rather
than relying too heavily on the United States.
“If they expose themselves to markets such as Canada or Europe, then the
gaps in the exchange rate won’t harm them as dramatically as is the
case with the dollar,” he said, “because today, most of the limitations
on exporters come from the dollar.”
Ben-David also predicted that the Bank of Israel would raise the
interest rate by a quarter-point to 3.25% in June as it fights forecasts
of high inflation. He said he expects the benchmark rate to rise to 4%
by the end of the year.
Ben-David said the increasing interest- rate differential between Israel
and the US, which is not expected to raise rates until 2012, will see
“the exchange rate fall to 3.30-3.35 during the coming months, even
though we expect that in the next few weeks there will be a slight
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