PM to convene economic roundtable to address strong shekel

"Who would have believed that the shekel would turn into one of the most powerful currencies in the world."

January 13, 2011 23:57
3 minute read.
Prime Minister Binyamin Netanyahu

Netanyahu Evil Genius 311. (photo credit: Associated Press)


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The government will meet soon with employers and the Histadrut to discuss how a strengthening shekel is affecting the export industry, Prime Minister Binyamin Netanyahu said Thursday.

“Who would have believed that the shekel would turn into one of the most powerful currencies in the world,” he said at the Israel Manufacturers Association annual conference in Tel Aviv. “I will summon the economic roundtable as soon as next week to discuss the problems in the industry and difficulties hurting Israeli exports.”

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Association president Shraga Brosh called upon Netanyahu to bring all the relevant sides together at the economic roundtable.

“We have gone through a difficult period, but at some point the road ends,” he said at the conference. “From our point of view, a shekel-dollar exchange rate of NIS 3.50 is impossible. Over the past three quarters, exports have weakened and job creation has come to a halt. We are very concerned about activity in 2011 and are urging decision makers to take the necessary steps to strengthen the dollar.”

A survey published by the association this week found that manufacturers had lost $3.3 billion last year due to the volatility in the shekeldollar exchange rate.

Finance Minister Yuval Steinitz said his ministry was in a close dialogue with the Bank of Israel to find a solution to the problem in the foreign- exchange market.

“The interventionist policy by the Bank of Israel in the foreign-exchange market was right and helped the economy,” he said at the conference.

“Over the past few weeks we have been working in dialogue with the Bank of Israel regarding developments in the dollar exchange rate.

We are aware of the problem it is creating for industry and production. For the past few days a small team in the ministry has been discussing the question of what we can or should do to cope with the problem.”

Last year, the shekel appreciated against the dollar about 6 percent and against the euro by 12.9%.

“The Bank of Israel maintains a very tight leash on the exchange rate through its active currency interventions,” Barclays Capital analyst Daniel Hewitt said in a report Thursday. “However, the strength of the economy means that the Bank of Israel will allow some currency gains to come through and will be delivering further interest-rate hikes as well. In the next stage the government will have to develop supplemental ways to contain appreciation.”

“2010 was one the most successful years for Israel’s economy compared with economies in the developed world, and there is no doubt that local industry has taken an important part in the recovery through investments and job creation,” Steinitz said.

“Looking ahead to 2011, we have decided to leave emergency steps in place that were introduced in mid-2009 to assist businesses, such as the export insurance program and the fund for small- and medium- sized businesses.”

National Infrastructures Ministry director-general Shaul Zemach said only longterm planning could provide for infrastructure, electricity and water needs.

“However, today there are no long-term strategies implemented for water, electricity or gas supply,” he said at the conference. “Instead, we are working with emergency plans. One of the ways for industry to become more competitive is by reducing energy costs. The switch to natural gas will cut costs, but we need the necessary infrastructure.

We are moving slowly along the process. The main problem is that there are too many bodies, from ministries to regulators, that need to make decisions. Authority and responsibility need to be determined to advance the implementation of government decisions and secure the electricity market in the coming years.”

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