Israel's current account surplus, the main forcing driving the strengthening of the shekel, climbed to an all-time record $20.1 billion in 2020, the Central Bureau of Statistics reports. The surplus is up from $13.4 billion in 2019 and beats the previous record of $16 billion in 2015.
The current account surplus reflects the entry and exit of foreign currency into and out of the Israeli economy, stemming from imports and exports of goods, services, capital, direct investments, financial investments, and more. The shekel exchange rate is strongly impacted by this factor with a massive influx of dollars meaning the strengthening of the shekel against the dollar and vice versa.
With the Israeli economy producing NIS 1.386 trillion in 2020 with an average exchange rate of NIS 3.44/$ during the year, the current account surplus represented 5% of GDP - a figure strongly helping Israel's international credit rating. S&P recently reaffirmed Israel's rating despite the country not passing a budget, the political uncertainty, and the widening of the budget deficit. This was largely because of the current account surplus and the strong influx of direct investments from abroad.
Published by Globes, Israel business news - en.globes.co.il - on March 8, 2021
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