The continuing fall of the US currency is set to cut sales of Israeli exporters by $1.9 billion in the coming year and impair their competitiveness, the Israel Manufacturers' Association warned Monday.
"The weakness of the US dollar is negatively affecting the sales and profits of Israeli exporters and therefore the Bank of Israel needs to further cut interest rates," Dan Propper, chairman of Osem Investments told The Jerusalem Post. "However, many Israeli companies are also exporting to Europe and are benefiting from the strength of the euro offsetting some of the losses caused by the weakness of the US currency."
Similarly, Eli Amit, vice-president economics at Israel Chemicals Ltd., said that although the company had large exposure to US dollar exports, which was affecting business over the past months, diversification of exports to Europe and the UK was helping to hedge against the dollar because of the strength of the euro and the pound sterling.
Meanwhile, the Manufacturers Association urged Bank of Israel Governor Stanley Fischer to cut interest rates by at least another quarter percentage point at the end of this month to help maintain competitiveness of exporters abroad.
The Association pointed out that given that about 75 percent of total exports were dollar- denominated, the drop of the US currency of about 8% against the shekel since the beginning of the year, would also have an impact on the pace of the growth of the economy.
Fischer last week dropped the lending rate by a quarter-point to 5%.