Man counts money near currency exchange in Kiev [file].
(photo credit: REUTERS)
The Israel Export Institute and the Manufacturers Association of Israel are calling for government support to help exporters struggling against a weak euro.
The Bank of Israel has been buy - ing up foreign currency and set its interest rate at a record-low 0.1 per - cent for April in an effort to less - en the effects of the strengthening shekel. Although the shekel weak - ened 5% against the dollar between the last two interest-rate decisions, it strengthened 1% against the euro, according to the central bank.
That has made selling goods in Europe, Israel’s largest regional trad - ing partner, increasingly difficult.
There was an 8% drop in exports in the December-February period rel - ative to the same period the year before, which amounts to $14.3 bil - lion, the Export Institute reported.
The chemical, agriculture and phar - maceutical sectors were the hardest hit.
“I am sure that every economic pol - icy maker in the economy is aware and recognizes the importance of exports as a primary factor for con - tinued growth in the economy and will act accordingly,” Export Institute chairman Ramzi Gabai said.
There are few policy tools available to the Bank of Israel at a time when so many other countries are conducting aggressively expansionist monetary policy.
In an interview with the Associa - tion of Banks in Israel’s publication Banking , Bank of Israel Governor Kar - nit Flug said: “The exchange rate was sinking among other things because of the very expansive policy pursued in many countries, including nega - tive interest rates and quantitative easing on a large scale. This caused a reversal of the devaluation. This trend worries us, given the business sector’s need to cope with a still reces - sive global climate.”
An HSBC report last week incor - rectly predicted that the Bank of Isra - el would drop its own interest rates into negative territory and embark on quantitative easing. However, such steps are possible in the future.Globes contributed to this report.