By Ira Sharkansky, Ph.D
JERUSALEM — The shekel is strong. The dollar is weak. What does that mean? Commentary here puts the blame on high investments from overseas in Israel, especially in high-tech. It also means that Israeli purchases in the US, or in dollar-linked countries–including Israeli travel overseas, are cheap. But Israel exports to the same places aren’t as profitable as usual. There are fewer dollars coming into the country in exchange for what’s exported.
Currently the dollar is worth 3.11 or 3.10 shekels. In February 1, 2006, a Dollar bought 4.69 shekels; The rate for a dollar hasn’t been this low for anytime in the previous 18 years, the extent of the tables that my computer produces conveniently. The dollar is also low against the euro, but the drop there does not match the dollar against the shekel.
The shekel is also strong against the euro. Currently a euro buys 3.6 shekels. Ten years ago a euro bought 5.3 shekels. The picture is similar when measuring against the British pound, the Japanese yen, and the Chinese yuan.
Speculation that the dollar can fall, and the shekel rise until it’s 2 shekels per dollar.
The Bank of Israel concerns itself with the balance of costs and benefits of a strong shekel, and occasionally buys large blocs of dollars in order to keep things orderly, according to its considerations.
International economies are being shaken by inflation, dealing with increases in the costs of raw materials, manufactured goods, and the costs of shipping. At least part of this is due to commotions surrounding the coronavirus.. American inflation is above 6 percent annually; Israel’s rate is 2.5 percent; Germany’s is 4.5 percent; Britain’s 3.1 percent.
And here we’re in the midst of a commotion focused on price-fixing among major sellers and suppliers of consumer goods. It’s against the law for two or more companies to work together on prices, but there is a lot of subtle fixing to be sorted out. It’s currently under investigation.
Thanks to revelation by one of the television channels, we’ve learned that a major seller has maintained branches that sell at sharply reduced prices to the ultra-Orthodox. That’s now been changed to even prices. However, a newspaper report shows that differences are not even. For some things, the Haredim pay more. Lots of commotion, and perhaps a bit of exaggeration by reporters. And a Knesset hearing featured a loss of temper by one of the prominent sellers, who was then sent out of the room accompanied by Knesset guards. Lots of television coverage, with commentators suggesting that it would be better if the heads of major supermarket chains took more accommodating postures when speaking with the media. .
We’re not thinking of any international travel, but there are those who are. A popular destination is Dubai. Why? Perhaps the relatively low prices of the trip and hotels, and the opportunity for shopping. We’re not attracted, but others are.
And now israel’s gates are open, to some extent, for international tourists. But with lots of regulations, not all that clear, about inoculations and checking about Coronavirus prior to travel, and perhaps again at the Ben Gurion Airport. .
The country, as always, is dependent on international buying and selling, and on tourism. As well as international investments, both for Israeli investors and outsiders investing here. So the value of the shekel against the dollar and the euro, pound, yen, and yuan, is important for those concerned with profit. And who isn’t?
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Ira Sharkansky, Ph.D. , is professor emeritus of political science at Hebrew University. He may be contacted via ira.sharkansky@sdjewishworld.com