Israel’s shekel hits nine-year record high against dollar

Written by on August 28, 2020

The dollar has been weakening worldwide against the major currencies over the past few months as the US Fed prints money to cope with the coronavirus crisis.

Dollar and shekel, side by side (photo credit: THOMAS WHITE / REUTERS)

Dollar and shekel, side by side

(photo credit: THOMAS WHITE / REUTERS)

The Israeli shekel hit a nine-year record high against the dollar on Thursday, set at NIS 3.369 for $1.

The rate is the lowest for the dollar since June 2011, when the exchange rate for 1 dollar was set at 3.363.

This record is not only because the shekel is getting stronger, but more because the dollar has been weakening worldwide against the major currencies over the past few months as the US Fed prints money to cope with the coronavirus crisis.

“The jump of the shekel against the dollar strengthens the purchasing power of Israeli citizens, as their salaries are paid in shekel,” said Gad Lior, senior analyst for Ynet.

According to Globes, the large number of Israelis who are normally travelling abroad in the summer and stayed at home in Israel this year because of the corona crisis and the travel restrictions is one of the main reasons why the shekel became so strong.

Prico Risk Management and Investments CEO Yossi Fraiman noted that “The Bank of Israel has recently been purchasing foreign currency to halt the appreciation of the shekel beneath NIS 3.40/$. The Bank of Israel was forced to buy billions of dollars and push up its foreign currency reserves to $157 billion. The Bank of Israel has decided to temporarily halt its intervention measures and to allow the dollar free movement and the dollar has dived sharply.”

“The halt in the Bank of Israel’s intervention in foreign currency trading could open the way for the shekel to appreciate to its historical low (but strong) level of NIS 3.20/$ in 2008,” continued Fraiman.

“The appreciation of the shekel is all the more significant in the wake of the recession in the economy and the harm to the engine of growth, or main engine, the high-tech sector and software services.”

Manufacturers Association of Israel president Ron Tomer said, “Israeli exporters are coping with two diseases at the same time – the coronavirus and the fall of the dollar.”

“Such a low rate of the dollar could lead to the cessation of exports of certain products due to lack of viability and may result in employee layoffs in the exporting factories,” Lior added, emphasizing that Israel exporters are negatively affected, by getting less dollar for the same dollar.

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