The Dollar Continues to Rise

No stopping: the dollar crossed the 3.8 NIS threshold this morning

The dollar continues to rise, and this morning at the opening of the trading week in the local foreign exchange market, the dollar crossed the threshold of 3.8 NIS. This could lead the Bank of Israel to raise the interest rate again

(Photo: Nati Shohat/Flash 90)

This morning (Monday), the trading week opened in the local foreign exchange market with the dollar rising and strengthening, trading at 3.8 shekels. The last time it traded at this level was in March 2020 due to the COVID-19 pandemic, when the dollar reached 3.86 shekels and stayed at that level for only one day. The period during which it was traded extensively at this level was in 2016.

The rise in the dollar is impacting inflation and the cost of living in Israel, and many economists are concerned that there might be no alternative but to raise interest rates again by the Bank of Israel.

Another step that the Bank of Israel may take in order to lower the dollar exchange rate is selling a portion of the dollars it holds, which were bought at a lower price than the current rate. The Bank of Israel currently holds over 200 billion dollars.

The increase in the dollar poses significant challenges to the local market and the import sector. This rise leads to an increase in the cost of living, affecting everything from food products to housing construction. Imported goods into Israel will become more expensive, and now, during the summer vacation period, even travel abroad will become pricier. From purchasing flight tickets to renting hotel rooms and cars abroad, all of these expenses paid in foreign currency and converted to shekels will become more expensive.

However, like any crisis, there are beneficiaries of the rise in the dollar. In the export sector, profits have increased due to the higher dollar exchange rate. While domestic expenses such as salaries, taxes, bills, and the like are in shekels, the profits earned in dollars are advantageous.

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