Turmoil in Egypt May be Driving Up Shekel-Dollar Rate

One dollar bought slightly more than 3.57 shekels Monday morning as the shekel lost some of its recent strength, possibly because of the violence in Egypt, according to the Atrade foreign exchange service. The shekel also weakened against the Euro.

The Israeli currency, which most analysts believe will strengthen over the long-term, was trading at 3.53 shekels to the dollar two weeks ago.

The Central Bureau of Statistics reported on Sunday that the Gross Domestic Product (GDP) soared in the second quarter by 5.1 percent annually, far above expectations. Working against the shekel's strength is the prospect of a stronger dollar, depending on the U.S. Federal Reserve Bank’s tapering off of bond purchases.

In the long term, the Israeli economy is expected to benefit from a windfall in royalties on exported natural gas, which may lead to a cut in taxes and a further rise in consumer spending.