The Times of Israel newspaper reported that the shekel exchange rate reached about 2.9 to the dollar, the highest level since October 1993, considering that this rise threatens the basic growth engines in the Israeli economy, at a time when the government remains silent about its repercussions.
According to the newspaper, the Bank of Israel has not yet intervened with its monetary tools, despite widespread warnings about the repercussions of the currency’s strength. Technology companies and exporters generate their revenues in dollars, while paying salaries and taxes in shekels, which raises costs and puts pressure on profits.
This reality may push some companies to make difficult choices, including reducing their business or transferring part of their activity abroad.
According to the Federation of Israeli Manufacturers, export losses may reach about 31.5 billion shekels, or about 10.9 billion dollars, by the end of the year, in addition to tax losses of approximately 3 billion shekels, knowing that exports represent about 40% of the Israeli economy.
Bank of Israel Governor Amir Yaron pointed out that the rise of the shekel by about 20% against the dollar over the past year harmed the profitability of exporters, but he considered that the strength of the currency, in return, reflects investor confidence and capital flows, in addition to the continued activity of the technology sector despite regional conditions.
On the other hand, manufacturers and experts warn that the continued strength of the shekel may weaken the competitiveness of the economy, and push technology and research and development companies to move their operations outside of Israel.
The head of the Manufacturers Union called for lowering interest rates and providing a government support package, warning of the loss of technological superiority, while businessmen indicated that some companies have already begun studying transferring their activities abroad due to high costs.
The technology sector is considered the most vulnerable to pressure, because its revenues are in dollars and its expenses are in shekels, which is directly reflected in its profits.
The Bank of Israel had stated in its annual report for 2025, published last March, that the Israeli economy lost 8.6% of its annual gross domestic product, or 177 billion shekels, equivalent to 57 billion dollars, during the years 2024 and 2025, as a result of the war in the Gaza Strip.
