stack of dollars 248 88.
(photo credit: Channel 10 [file])
Options point to a further strengthening of the shekel, after the Bank of Israel
set the shekel-dollar representative exchange rate at NIS 3.395 on Sunday
morning – its lowest level since July 18, 2008. The dollar fell 0.13 percent to
NIS 3.391 in early inter-bank options on Sunday and the euro fell 0.32 to NIS
The shekel-dollar exchange rate has fallen over 8% since its high
point of NIS 3.71 on January 31. The shekel has been strengthening thanks to the
dollar’s weakness against other currencies, combined with interest rate hikes by
the Bank of Israel, which have widened the interest rate gap against the dollar
and caused capital inflows.
Last week, Federal Reserve Board Chairman Ben
S. Bernanke kept the US interest rate unchanged. The Fed’s $600 billion
qualitative easing 2 plan will expire in June, but Bernanke promised to keep the
interest rate at its negligible level for an extended period. In short, monetary
tightening is not in the cards in the foreseeable future, in contrast to other
countries and the eurozone.
Meanwhile, the Manufacturers Association of
Israel will hold an emergency meeting on Wednesday to discuss the strengthening
Scores of manufacturers and exports nationwide are due to attend,
and Minister of Industry, Trade and Labor Shalom Simhon has been
The meeting is entitled ‘Without exports, there is no growth and
no jobs.” Company executives will call on the government and Minister of Finance
Yuval Steinitz to institute measures to stop the appreciation of the
The Manufacturers Association says that the shekel has
appreciated 17% against the dollar in the past two years, resulting in fewer
shekels from every dollar earned overseas, and affecting the competitiveness of
Israeli manufactures in the world. The Manufacturers Association warns that if
the crisis continues, it will cause a severe blow to industry and have a direct
impact on jobs.