Photo Credit: Flash 90
Ticker tape at Tel Aviv Stock Exchange.

The shekel-dollar rate soared to more than 3.96 on Tuesday for the first time in two years as investors dumped shekels and bought dollars due to the almost certain break-up of the government coalition and the need for new elections that will leave the country without a bona fide budget.

The rate rose by one more than 1 percent. An increase of that size has been very rare since nearly a decade ago when the only question was not whether the shekel would weaken but by how much.

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The 2015 budget has not been passed, and new elections are exactly what the economy does not need, except for the media that will profit from advertising and the printing presses that will be running day and night to trash the country with party propaganda.

The big winner of the cheap dollar is exporters. A strong currency makes people feel proud, but a cheap currency always boosts exports since the incoming dollars are converted to shekels. The more shekels the dollar is worth, the more profits a company makes.

The downside is that consumers have to pay more shekels for imports.

Globes quoted FXCM as saying, “If we do have elections before the budget is approved, this will be disastrous for the Israeli economy and will severely damage market confidence, both locally and globally, in the Israeli leadership.”

 

 


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Tzvi Ben Gedalyahu is a graduate in journalism and economics from The George Washington University. He has worked as a cub reporter in rural Virginia and as senior copy editor for major Canadian metropolitan dailies. Tzvi wrote for Arutz Sheva for several years before joining the Jewish Press.