Strengthening shekel pushing dollar to new lows

Shekels Photo: Shutterstock

Prico CEO: We may see rates of NIS 3.30-3.40/$ - a low not seen since Shimon Peres's stabilization plan.

The shekel is again strengthening against the dollar and weakening against the euro today. In early afternoon inter-bank trading, the shekel-dollar exchange rate was down 0.34% from yesterday's representative rate at NIS 3.467/$, and up 0.08% against the euro at 4.141/€.

Yesterday, the Bank of Israel set the shekel-dollar representative rate down 0.258% from Tuesday's exchange rate at NIS 3.479/$ and set the shekel-euro rate up 0.092% at 4.138/€.

Yossi Fraiman, CEO of Prico risks management and investment said, "The last thing that the Bank of Israel and Ministry of Finance want is for the fall of the shekel-dollar exchange rate to harm high-tech companies, especially due to the large layoffs at Teva. The fall in the shekel-dollar exchange rate is beginning to be a very difficult problem for high-tech companies. When the dollar goes below the NIS 3.50/$ level that creates major difficulties for early stage startups and mature high-tech companies coping with global competition with their operational costs in Israel very expensive in dollar terms especially in light of data about the jump in high-tech salaries in Israel as well as rents, municipal taxes and electricity. The continuing strengthening of the shekel against the dollar pushes up costs in dollar terms and consequently more and more companies are moving operations outside Israel and examining setting up R&D centers overseas. The advantage of a quality and unique workforce is diminishing and this is a major threat on the future of Israel's high-tech industry."

He added, "Companies with diversified currencies are harmed less especially if they have major operations with China. But still the US dollar is the dominant currency for the sales of most Israeli software and hardware companies. Looking ahead the Israeli economy may encounter a much stronger shekel trading at NIS 3.3-3.4/$, a low not seen since Shimon Peres's stabilization plan.

Published by Globes [online], Israel business news - www.globes-online.com - on December 28, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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Shekels Photo: Shutterstock
Shekels Photo: Shutterstock
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