Israeli tech exporters and manufacturers are warning of an unfolding economic crisis as the shekel’s rise to a 33-year high threatens to erode major growth engines of the country’s economy. All the while, both the Bank of Israel and the government have remained fairly silent, preferring to avoid dealing with the issue and passing the buck between each other.

The Finance Ministry maintains that the central bank possesses the arsenal of monetary tools that could help temper the shekel’s steep surge. It is currently trading at around 2.90 per dollar, its highest value since October 1993. The Bank of Israel has a number of policy instruments in its arsenal, the main one being the interest rate. It may also buy or sell foreign currency to moderate the negative impact of shekel appreciation or weakness on inflation and economic activity.

Speaking at a conference in early May, Bank of Israel Governor Amir Yaron acknowledged that the shekel’s 20 percent appreciation versus the dollar over the past year hurts exporters’ profitability. Yaron emphasized that while the central bank’s monetary policy tools were broad, intervention in the foreign exchange market was limited to unusual movements in the exchange rate or reserved for the event of market failure.   ​

Yaron said that the strength of the local currency reflects investor optimism about a US-Iran ceasefire deal, robust capital inflows, and the resilience of the Israeli economy despite almost three years of near-constant war.

Now, the strong shekel threatens to put the resilience of the economy at risk, tech exporters and manufacturers warned.

The Finance Ministry and the Bank of Israel declined to comment on possible measures to ease the plight of the strong shekel on Israel’s industry and economy.

In yet another plea, the head of the Israel Manufacturers’ Association on Thursday urged the Bank of Israel to take immediate action and lower interest rates, to slow the continued appreciation in the shekel-dollar exchange rate.

Exporters called on the Finance Ministry to provide an assistance package, alongside incentives that will continue to make Israel attractive for business operations and investments.

“Israel is losing its growth engines, which will have serious consequences for the economy and harm everyone,” Israel Manufacturers’ Association President Avraham Novogrocki cautioned. “We are losing our technological advantage that was built over decades.”

“High-tech companies and research and development centers are already starting to migrate........

© The Times of Israel