The value of any country’s currency shouldn’t be perceived as mirroring its actual fiscal stamina and must never be regarded by a self-congratulating populace as a source of national pride. Put plainly, a currency’s marketplace worth doesn’t necessarily reflect the real economy. Least of all is it about booking cheaper vacations overseas.As with other currencies, so it is in the case of the shekel. Its value determines whether we can collectively make ends meet – manufacture and sell our goods abroad, while keeping our own compatriots gainfully employed and contributing their share both as taxpayers and consumers.Foreign currency exchange rates are so crucial here, indeed, that for the past two years the governor of the Bank of Israel, Stanley Fischer, has been forced to intervene frequently in currency trading. He has done so reluctantly by purchasing dollars to keep the shekel from appreciating even more dramatically than it already has.The outcome of his efforts hasn’t been an unqualified success. Israel’s dollar reserves are bulging, but the shekel steadily continues its upward climb. Presumably things would have been worse still without Fischer’s move to impose moderate limitations on the dollar glut. However, as is, an overvalued shekel renders Israeli exports overpriced and less competitive abroad. This impedes growth by cutting deeply into the exporters’ profits, to the point of destabilizing their operations and triggering layoffs.Therefore, disinclined though Fischer is to escalate the BoI’s intervention, the governor had no choice but to announce last week new reporting requirements for currency transactions exceeding $10 million daily. For now, this is being presented as a monitoring and analytical tool, to help the BoI scrutinize market dynamics. There’s no doubt, however, that reporting requirements could well be the prelude to levying taxes on these transactions.IT MAY not be much at this point, but even introducing an element of anxiety into the currency free-for-all is an eminently welcome move. This is because, to our detriment, the shekel has become a manipulated currency. It serves foreign speculators to dump dollars, which earn next to no interest, and open shekel accounts which will get them a 2-percent yield (more, if they purchase short term Israel government bonds – Makam). Levies, which will cut into the proceeds of speculation, might somewhat even the odds.Let’s be clear: The shekel’s woes aren’t homemade. They originate in the deliberate US policy of keeping dollar rates low in order to increase dollar competitiveness and make American goods more exportable. The dollar’s value is further eroded by gross overspending. And America isn’t the only power to tinker with its currency. The cumulative effect of such machinations is a de facto fiscal war. Other countries, Israel included, are being hurt in the crossfire.The upshot is that Israel has become exceedingly attractive to international speculators. Hence the monthly currency trade volume here stands at a whopping $100 billion – 60% of which is conducted by foreigners, whose profiteering plainly damages our economy. We need to remember that exports account for 40% of Israel’s GNP, taking this far beyond the problem of specific economic sectors.While non-intervention may generally be a most laudable sentiment, occasions arise when it’s imprudent to adhere rigidly to principle. Overseas speculators have taken control of our foreign currency marketplace. As 2010 drew to a close, it was reported that 66% of all foreign currency transactions were performed by foreign nonresidents.It gets worse. Foreigners were behind no less than 80% of swap-type transactions (conditional conversion of one currency into another for fixed time frames). And once foreign traders obtain shekels, they buy up Makams. At present, nearly a third of all Makams are owned by foreigners. This is 30 times more than they owned just 18 months ago. Foreign money, moreover, can be moved out quite swiftly. In times of tension or war, sudden exits by speculators can be calamitous.The ramifications are that outsiders cast a dark and overpowering shadow on our entire financial administration and on the ability to keep our economy on an even keel. The shekel has been under relentless daily assault since early 2008. Last week’s move amounted to a welcome warning by the BoI that it is preparing a defense.