{"id":394361,"date":"2026-04-16T00:52:11","date_gmt":"2026-04-16T00:52:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/394361\/"},"modified":"2026-04-16T00:52:11","modified_gmt":"2026-04-16T00:52:11","slug":"shekel-breaks-below-3-to-the-dollar-in-first-since-1995-exporters-warn-of-economy-risk","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/394361\/","title":{"rendered":"Shekel breaks below 3 to the dollar in first since 1995; exporters warn of economy risk"},"content":{"rendered":"

The shekel on Wednesday crossed below the threshold of NIS 3 per dollar, its strongest level in more than 30 years, fueled by growing optimism over an end to the war with Iran and a ceasefire in Lebanon. But manufacturers and exporters warned that the strength of the currency presented a risk to the economy.<\/p>\n

The shekel was trading at 2.993 to the dollar at one point on Wednesday, its strongest showing since October 1995. The local currency has appreciated more than 5 percent against the dollar so far in 2026, and more than 20% over the past year, despite an economy strained by military campaigns with Iran and ballooning war costs.<\/p>\n

\u201cA dollar exchange rate below NIS 3 is a death blow to export profitability,\u201d warned Israel Manufacturers\u2019 Association President Avraham Novogrocki. \u201cA cumulative change of about 20% in the exchange rate completely erases profit margins and pushes factories to the brink of closure.\u201d<\/p>\n

The overly strong shekel has a deflationary force as it makes imports cheaper, restrains price rises and credit costs for consumers, and enables the Bank of Israel to lower interest rates. However, it also erodes the competitiveness of Israeli manufacturers, especially businesses reliant on exports and earning in dollars, while paying expenses including salaries in shekels.<\/p>\n

Novogrocki cautioned that the industry is grappling with \u201ccollapsing dollar revenues and rising shekel expenses,\u201d which will have broader consequences, including reduced activity and investments, and layoffs.<\/p>\n

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\u201cHigh-tech and multinational companies are also already considering relocation to shift operations from Israel,\u201d said Novogrocki. \u201cThis will dramatically harm state revenues, and raises real concerns about tax revenues.\u201d<\/p>\n

\t\"\"<\/a>
\n\t\tIllustrative: Machinery in an armored vehicle manufacturing factory, December 27, 2023. (Defense Ministry)<\/p>\n

\u201cWithout immediate action, the entire economy will pay the price,\u201d he said.<\/p>\n

Exports make up as much as 40% of Israeli economic activity. Exports of goods were down 7.4% in 2025 in shekel terms, according to Central Bureau of Statistics data.<\/p>\n

So far, the Bank of Israel has not rushed to intervene in the market by buying tens of billions of dollars to moderate the shekel\u2019s gains, as it has done in the past, or by cutting interest rates.<\/p>\n

\u201cWhen the shekel strengthens, the consumer is able to import and travel abroad cheaply, but exporters face the brunt,\u201d said Leader Capital Markets chief economist Jonathan Katz. \u201cIt\u2019s an erosion of their competitiveness, which at some point impacts our export performance.\u201d<\/p>\n

\u201cHowever, the Bank of Israel is not likely to intervene as this is not a bubble, the economy has been resilient, and there is no threat to inflation,\u201d said Katz.<\/p>\n

The Bank of Israel has previously indicated that it will act in the foreign exchange market in the event of unusual movements in the exchange rate that are inconsistent with underlying economic conditions, or when there is a market failure.<\/p>\n

\t\"\"<\/a>
\n\t\tIllustrative: The flags of Israel and Germany fly in front of the Arrow 3 missile defense system and a radar dome during an event of the German Air Force at the Holzdorf Air Base, eastern Germany, on December 3, 2025. (RALF HIRSCHBERGER \/ AFP)<\/p>\n

\u201cThe Bank of Israel will consider intervening in the foreign exchange market if there are sharp shekel fluctuations during a short period of time that are not reflective of the economic and geopolitical reality,\u201d said Katz.<\/p>\n

Mizrahi Tefahot Bank\u2019s chief markets economist Ronen Menahem said that mainly local market forces and economic fundamentals are continuing to drive strong demand for the shekel.<\/p>\n

\u201cThe market anticipates a reduction in geopolitical risk amid optimism for an end of war in the region and prospects for agreements with neighboring countries, including Saudi Arabia, which will further boost the growth potential of the Israeli economy,\u201d said Menahem.<\/p>\n

\u201cThe optimistic scenario is attracting foreign investors to the local stock market and direct investments from abroad into the high-tech sector, alongside increased defense export sales, which are all factors driving demand for the shekel.\u201d<\/p>\n


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