The Strong Shekel Threatens the Israeli Economy by Pushing Exporters and Technology Companies Out of the Market

SadaNews Economy Translation - The record rise of the Israeli shekel, which broke the barrier of 3 shekels per dollar for the first time in three decades, poses a direct threat to the export sector and Israeli technology companies that rely on the dollar for their revenues.

According to a report published by "The Times of Israel," Israeli exporters warn that the strength of the shekel sharply reduces their profits, as salaries, taxes, and operational expenses are paid in shekels while revenues come in dollars. This gap weakens competitiveness and forces companies to consider cutting production or relocating their operations abroad.

The report states that the Israeli Manufacturers' Association estimates that the continued rise of the shekel will lead to a loss of exports valued at 31.5 billion shekels (10.5 billion dollars) over the next year, in addition to a decline in government tax revenues of about 3 billion shekels. Official data indicates that industrial exports fell by 9% in the first quarter of 2026, after a decline of 7.4% in the previous year.

Technology companies, which represent more than half of Israeli exports and one-fifth of the GDP, are facing similar pressures. Economists assert that large multinational and local companies such as Wix and Monday.com will be forced to reduce employment within Israel, which negatively impacts tax revenues and threatens economic growth.

Manufacturers see that the continued strength of the shekel, along with the U.S. tariffs imposed on Israeli goods, has raised the prices of their products by up to 35%, making competition in global markets nearly impossible.

In light of the neutrality of the Bank of Israel and its refusal to intervene in the currency market, exporters are urging the Israeli government to provide direct support by easing municipal taxes, or funding marketing and new equipment, or finding mechanisms to curb the rise of the local currency.