Shekel Surges to 32-Year High, Threatening Israeli Exports

(MENAFN) Alarm bells are ringing across Israel's business community as the shekel surges to its strongest position against the US dollar in over three decades, with exporters and technology firms warning the currency's relentless climb could hollow out two of the country's most vital economic engines, according to local media reports.

Israeli media reported Friday that the shekel is currently changing hands at approximately 2.9 to the dollar — a level not seen since October 1993 — while the government of Prime Minister Benjamin Netanyahu has remained conspicuously silent on the mounting crisis.

Exporters and Tech Firms Under Pressure
The currency's appreciation is hitting export-driven businesses and technology companies with particular force. These firms generate the bulk of their revenues in dollars from overseas markets, yet bear their operating costs — salaries, taxes, and overheads — in shekels that have grown progressively more expensive to service.

The Manufacturers Association of Israel (MAI) has put hard numbers to the threat, estimating that export losses attributable to the strong shekel could surpass 31.5 billion shekels — equivalent to $10.9 billion — by year's end, with an additional 3 billion shekels ($1 billion) in projected tax revenue losses. Exports currently represent roughly 40% of Israel's total economic output, according to figures from the country's Central Bureau of Statistics.

The Bank of Israel has yet to intervene in currency markets despite the escalating warnings, a restraint that is drawing growing frustration from the private sector.

Central Bank Acknowledges the Strain
Bank of Israel Governor Amir Yaron acknowledged earlier this month that the shekel's 20% appreciation against the dollar over the past year had materially dented exporters' profitability. Yet he framed the currency's strength as a reflection of underlying confidence — attributing it to "investor optimism" fuelled by the US-Iran ceasefire, robust capital inflows, and the broader resilience of the Israeli economy despite nearly three years of near-continuous conflict.

That framing has not gone down well with the business community. Exporters and technology manufacturers "are warning, with growing intensity, that the strong shekel is putting that resilience at risk," Israeli media reported.

Calls for Immediate Action
MAI president Avraham Novogrocki escalated pressure on the central bank Thursday, calling for an immediate interest rate cut. "We are losing our technological advantage that was built over decades," he warned, while simultaneously urging the Finance Ministry to roll out aid packages and investment incentives capable of keeping Israel competitive as a destination for business operations.

Prominent Israeli businessman Liad Agmon offered a starker on-the-ground assessment Wednesday via X, the US-based social media platform, writing that companies in his investment portfolio "are making advanced plans to move operations out of Israel. Industrial export companies are close to the brink of bankruptcy."

"A lot could be done about the situation," he added, lamenting what he described as an absence of leadership capable of addressing the crisis.

Technology labor market expert Dror Litvak identified the high-tech sector as particularly exposed, noting it faced a structural vulnerability because "most of its revenues are in dollars while a large portion of its expenses — especially wages — are in shekels."

What Is Driving the Shekel's Rise
Israel's Channel 12 reported in April that the shekel's gains were being driven in part by geopolitical optimism — specifically, prospects for a durable ceasefire with Iran and active diplomatic engagement with Lebanon. The strength of Israel's technology-driven economy was also cited as a contributing factor.

The broader economic backdrop, however, remains deeply scarred. The Bank of Israel's 2025 annual report, published in March, estimated that the Gaza war cost the Israeli economy 8.6% of annual gross domestic product — equivalent to 177 billion shekels, or $57 billion — across 2024 and 2025 combined.

Israel has continued violating the Gaza ceasefire agreement that took effect on Oct. 10, 2025. Israeli attacks since then have killed 846 Palestinians and injured a further 2,418, according to Gaza's Health Ministry. The ceasefire followed two years of conflict launched on Oct. 8, 2023, which killed more than 72,000 Palestinians, injured over 172,000 others, and destroyed an estimated 90% of civilian infrastructure across Gaza.

MENAFN08052026000045017169ID1111088733