How is the strong Shekel rate affecting pensions and inflation? What steps can be taken to limit inflation, and what should Israelis expect from the economy over the next year?
In a one-on-one interview with Tamar Uriel-Beeri, Managing Editor of jpost.com, Daniel Hass, veteran Bank Hapoalim analyst who covers foreign exchange and fixed income issues, discusses why foreign currencies such as the dollar, pound and Euro have been so weak against the shekel, and the practical ramifications of this phenomenon.
Hass, who has decades of experience in the foreign exchange market, traces the historical roots of inflation to the 2008 financial crisis and the pandemic, two periods in which governments injected vast amounts of money into the world monetary supply, eventually leading to inflation that is being felt at this time.
How have the strong shekel and inflation affected the average person in Israel? Hass explains that the effects are being felt in a number of ways. Pensioners whose income comes from the UK, Europe, or the United States, who receive their income in dollars, sterling, or Euro, who are confronted with rising prices in Israel, are finding that their purchasing ability has gone down dramatically, not only because of inflation, but because the value of their currency against the shekel has decreased.
High-tech companies whose primary client base is overseas and whose contracts are arranged in foreign currency are also adversely affected because of the stronger shekel. Companies that receive seed money from overseas in dollars and then convert those funds into shekels find that they have less money for investment.
While the Bank of Israel is combating inflation by raising interest rates, those changes will lead to increase mortgage payments for many families with variable or linked mortgages.
Uriel-Beeri and Hass discuss the practical steps that Israelis can take to deal with inflation, the entrenchment of inflation, and when it can be expected to end.
This article was written in cooperation with Bank Hapoalim.
The information contained here is accurate as the day of publication and should not understood as an alternative to professional consulting that takes into account the specific circumstances of the individual and are tailored to meet their needs.