"Catastrophe" and "chaos" were some of the reactions of Israeli industrialists in the past few days to the drop in the shekel-dollar exchange rate. The rate is currently at its lowest in five months.
At the end of last week, the rate continued to fall. On Friday, the representative rate was set at NIS 3.69/$. It continued to fall in inter-bank trading, to NIS 3.66/$.
"Despite our penetration of new markets, most of the revenue from exports is paid to us in US dollars, so that the fall in the value of the dollar continues to affect us. In many cases, exports to Asian countries are also dollar-based, so changes like this are felt by us strongly," Amos Shalev, head of the export department in the Kibbutz Industries Association told "Globes".
Some 30% of Israel's total exports are produced by kibbutz industries. According to Shalev, in the past two years, Israeli industry has learned to maneuver around the volatile dollar, which has ranged between 3.7 and 4.0 to the shekel. He says that if the shekel-rate continues to drop, manufacturers will have to take sever steps. "No-one will avoid the impact," he says.
"Measures by the Governor of the Bank of Israel can raise the shekel-dollar rate by NIS 0.05-0.10 at most, and so manufacturers must not pin their hopes on the Governor. The government must take action to open up new markets for local manufacturers. It would be best to include a more substantial sum for penetration into new markets in the two-year state budget, at least NIS 100 million a year, and in addition to expand the budget of the Chief Scientist," Shalev added.
Published by Globes [online], Israel business news - www.globes-online.com - on September 26, 2010
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