Israel’s biggest exporters are bracing for the end of central bank support that’s helped them stay competitive during the pandemic, a move they say may weigh on a $100 billion industry crucial to the nation’s economic rebound.
The Bank of Israel is close to exhausting a $30 billion dollar-buying program that’s reined in gains in the shekel and made exports cheaper to foreign buyers while the nation battled Covid-19. With the economy on the mend, and Governor Amir Yaron signaling July 5 that the program was a temporary salve, companies from Teva Pharmaceutical Industries Ltd. to Israel Aerospace Industries Ltd. are on edge.
“We’re living with uncertainty,” said Natanel Haiman, the head of economics at the Manufacturers’ Association of Israel, a Tel Aviv-based organization that groups more than 1,850 companies accounting for more than 90% of the country’s industrial base. “It’s a daily battle to keep the production lines moving,” partly because of the exchange rate.
The debate over the program mirrors the dilemma facing policy makers the world over as central banks consider how quickly to remove stimulus measures enacted as the pandemic erupted. In Israel, shekel policy provides an additional ingredient. The currency has appreciated more than any major counterpart in the past decade, eclipsing even the Swiss franc and the euro, and hobbling the exporters that account for more than a quarter of the $400 billion economy.
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