Alarmed, exporters demand swift measures to weaken shekel
‘Exchange rate a catastrophe,’ says owner of Jerusalem-based company
Manufacturers are becoming increasingly concerned about the swift appreciation of the shekel against the dollar and the euro.
On Tuesday the shekel-dollar exchange rate fell below NIS 3.70/$ during trading and the shekel-euro rate fell below NIS 3.90/€. In response, Manufacturers Association of Israel president and Federation of Israeli Economic Organizations/Chambers of Commerce chairman Shraga Brosh called on the government to put together a raft of fiscal policies that will ensure the competitiveness of Israeli exporters.
Brosh said: “The policies must include measures that will encourage the business sector and Israeli exports in equipment and innovation, professional training and increasing productivity in the workplace.”
Brosh also called on the Bank of Israel to keep interest rates low and to continue its policy of purchasing foreign currency and intensify the pace of the purchases in order to make the exchange rate more attractive.
Since the beginning of February, the shekel has strengthened 1.4% against the dollar, while the euro has anyway weakened 1% against the dollar. “The strength of the shekel dramatically hits Israeli exports,” said Brosh, “both in the short term in the fall of the shekel’s value received for exports and in the long term due to the loss of future deals and the inability to offer attractive prices on international markets.”
Israel Export and International Cooperation Institute chief economist Shaul Katznelson also expressed concern about the strength of the shekel. He said: “The exchange rate over the past month has not been good for exports and the effective nominal exchange rate is lower than it has ever been since it was first measured in 1999. Even in the worst-ever times, we never reached such a low point as this. The strengthening of the shekel over such a short period does major harm to the worthwhileness of exports for a large section of exporters.”
Katznelson added: “Other reasons for the appreciation of the shekel should be examined and it should be ascertained if there are other players backing the shekel such as people interested in short-term financial investment. If there are such activities – then it is certainly worth considering taxing short term transactions.”
Brosh also asked banks to check out whether speculation on the foreign currency market was strengthening the shekel. “In the event that such activities are being undertaken, then the Bank of Israel should lead a policy of a moving trading band for the exchange rate to prevent harm to export activities in the economy.”
“The exchange rate is a catastrophe,” said Arik Grebelsky, the owner of Jerusalem-based limestone company A. Grebelsky & Son, which has 100 employees and exports Jerusalem stone worldwide. “The Bank of Israel is implementing the right policies by purchasing dollars and keeping the interest rate low. Government ministries must also join the fray and take a series of steps to protect exports because the export industries are the engine of the economy.”