The Dollar is OUT! (the door) ~ should you panic now?
The use of the dollar is making a quiet exit in Tel Aviv. The main US and International accounting, management consulting, and law firms are dropping their use of the dollar for quoting and charging customers for services. They are shifting to the use of the new Israeli shekel (NIS). But there is a catch, they are re-pricing their services at the rate of 4.3 shekel to the dollar (today's rate is 3.65 NIS/$). Is this going to shake any one's trust in the "mighty dollar"? Not likely, not even in Israel. The reliance on using the dollar as a quoting and billing for services in Israel goes back to the hyper-inflation years. That was so long ago that most people will tell you stories about the Israeli economy by the light of a campfire somewhere in the woods. In other words, the weak Israeli shekel (now it's a 'new' shekel, it was a 'regular' shekel before and a lira before that) has been making a steady progress in strength and stability for over two decades now. Mostly because of the steady and wide range economy. The depency on a single market or a single sector is long gone. Also, the economic impact of the wars with Palestinians is also much less than ever before. In the second Lebanon war of 2006 the Israeli economy barely registered a blip. Stock market and NIS prices actually moved up rather than down. The strength of the NIS is simply a consequence of both trends.
KPMG Israel, moving rates of billing from dollars to shekels -- finally?
So Why do American and European companies move from billing in dollars to shekels? Simply because the dollar versus the shekel has declined by 20% in just a few months. Accountants and management consultants are not about to take 20% cut in pay, no matter where they work and who's company name they have on their business card. So the final result is a small discount if you signed a dollar contract in the last six months. The firms probably have price adjustment clause somewhere in their contracts anyway. But if they didn't, don't worry, they will make it up in the next billing cycle. Overall, the Israeli economy is on an upswing. It's about time, since the the second Lebanon war, second intifada, and the dot-com collapse before that. There are other good trends in terms of trade with new regions in Eastern Europe and Central Asia. The relative political stability in Africa is also helpful to Israeli companies. Finally, Israelis are much better off politically and militarily than ever before. There are less promises of "final peace" with the Palestinians, but the separation of Israel from the Palestinian territories seem to be holding. If you have any comments or insights into these trends, please drop us a line and we will address your comments. All the best, with a few more shekels in our pocket, AmiV from Tel Aviv ;8~)'
KPMG Israel, moving rates of billing from dollars to shekels -- finally? So Why do American and European companies move from billing in dollars to shekels? Simply because the dollar versus the shekel has declined by 20% in just a few months. Accountants and management consultants are not about to take 20% cut in pay, no matter where they work and who's company name they have on their business card. So the final result is a small discount if you signed a dollar contract in the last six months. The firms probably have price adjustment clause somewhere in their contracts anyway. But if they didn't, don't worry, they will make it up in the next billing cycle. Overall, the Israeli economy is on an upswing. It's about time, since the the second Lebanon war, second intifada, and the dot-com collapse before that. There are other good trends in terms of trade with new regions in Eastern Europe and Central Asia. The relative political stability in Africa is also helpful to Israeli companies. Finally, Israelis are much better off politically and militarily than ever before. There are less promises of "final peace" with the Palestinians, but the separation of Israel from the Palestinian territories seem to be holding. If you have any comments or insights into these trends, please drop us a line and we will address your comments. All the best, with a few more shekels in our pocket, AmiV from Tel Aviv ;8~)'
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