The all mighty DOLLAR ? does it need steroids ??
The dollar's value in New Israeli Shekels is going down. Not just a little, and not just this week. In the last six months (mid July '07) the value has gone down 16% (4.3NIS to 3.7NIS). With the dependence of Israeli economy on the US, you would think that people are rioting in the streets? But no such thing is happening. Well, people are certainly worried about the dollar here, probably next to the shekel it is the most used and respected denomination. But the reality is a little more complex. While Israelis always had respect to the US dollar and the American economy, there are bigger factors which drive the economy here. Today, no single element actually dominated the worries and headlines of the Israeli economy. The largest factor today which swamps the dependence on the US dollar is the shift of the Israeli economy from single market and single product focus to a more fractured and multifaceted structure. This shift together with higher emphasis on cooperation with foreign economies is easing the impact of the dollar's drop. The second largest factor by far is the drop in impact of Palestinian terrorism on the economy. Like the value of the US dollar, these are two uncontrollable factors, which to some extend bothers Stanley Fischer, the Israel bank chairman.
US dollar value in New Israeli Shekels, last 5 years, drop from ~5 to 3.6
Professor Fischer, a US import of sorts to the Israeli government attests the respect of 'locals' to the US economic strength. He is the first, and by far, the most prominent non-Israeli to hold a position of power in the Israeli government. To Israelis this is a "new" way of thinking, but Israelis are no longer too proud not to take advice from someone like Fischer. Actually, the appointment of a foreigner to such an important position is a reflection of Israel's ability to look outside and to use resources that are not available or developed internally. The attitude of doing what is most useful or practical in terms of resources is causing the shift from the dependence on the US economy and the dollar to greater use of other denominations and economies.
Value of Euro vs. NIS, set at 5.6 +/- 0.2
I notice that the shift to trade with other countries and develop business relations there is not simple or easy. Changes, specially on a large scale, are not quick to happen. Also, understanding and trusting new partners takes a certain amount of investment which to some extent is not recovered. For Israeli business this is a difficult step. Both the size of the economy and the history of how it was developed, has not trained business people to invest in long term relationships without seeing returns quickly. Some of this stems from the large amount of business based on early government investment and development. Some of the emotional hurdles to the changes come from simply the overall changes, the need to do something that will stretch the country's business position, preferences of the workers, and molding sectors to new habits. But, with today's global changes, Israel as a small country has done this a few times in the recent past. So, don't cry for the dollar Israel... and don't worry so much out there in the business world. We are moving, changing, and doing what it takes to have a better way of doing things.
US dollar value in New Israeli Shekels, last 5 years, drop from ~5 to 3.6 Professor Fischer, a US import of sorts to the Israeli government attests the respect of 'locals' to the US economic strength. He is the first, and by far, the most prominent non-Israeli to hold a position of power in the Israeli government. To Israelis this is a "new" way of thinking, but Israelis are no longer too proud not to take advice from someone like Fischer. Actually, the appointment of a foreigner to such an important position is a reflection of Israel's ability to look outside and to use resources that are not available or developed internally. The attitude of doing what is most useful or practical in terms of resources is causing the shift from the dependence on the US economy and the dollar to greater use of other denominations and economies.
Value of Euro vs. NIS, set at 5.6 +/- 0.2 I notice that the shift to trade with other countries and develop business relations there is not simple or easy. Changes, specially on a large scale, are not quick to happen. Also, understanding and trusting new partners takes a certain amount of investment which to some extent is not recovered. For Israeli business this is a difficult step. Both the size of the economy and the history of how it was developed, has not trained business people to invest in long term relationships without seeing returns quickly. Some of this stems from the large amount of business based on early government investment and development. Some of the emotional hurdles to the changes come from simply the overall changes, the need to do something that will stretch the country's business position, preferences of the workers, and molding sectors to new habits. But, with today's global changes, Israel as a small country has done this a few times in the recent past. So, don't cry for the dollar Israel... and don't worry so much out there in the business world. We are moving, changing, and doing what it takes to have a better way of doing things.
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