Israel Business Management

The dollar has dropped significantly against the shekel in the past few months from over 4 shekels to the dolar down to 3.8 currently.

What does this mean? It means that when Israelis go to the US to do shopping, they now have more buying power as their shekel has gained strength against the dollar (and US goods are all priced in dollars). It means Israelis can afford to travel more as the prices of most airlines are in dollars (except for El Al Airlines) and the prices have actually dropped as the shekel got stronger.

But is it all rosy?

The answer is clearly no.

When the dollar drops, one of Israelis biggest industries, tourism, takes a hit. Because the American visting Israel is only getting 3.8 shekels for every dollar he changes, he can buy less than he could last year when the dollar was over 4 shekels.

So, the tourists may choose to go elsewhere, where the local currency is not as strong against the dollar. Or, they may just choose to stay at home.

Companies with their headquarters in Israel, but have sales offices in the US, also suffer. Last year when they sold their goods and then changed the dollars into shekels to pay their expenses here in Israel, the dollar went further than ot does today. So, a company has to sell more in dollars today to make up for the difference in the exchange rate. All because the expenses in Israeli are paid in shekels.

Exporters have been hit hard as they also have the same costs they had before, but get less when they trade in the dollars.

So, as the government struggles with what to do to help the local economy, those Israelis looking to travel to the US, should have more fun shopping, knowing that they can buy more stuff this year than last.