Euro diver: reached 3.48, the lowest rate in 20 years - Walla! Of money

2021-11-17T10:21:07.863Z

Israelis who will soon be flying to red Europe due to the fourth wave of the corona will be able to enjoy the difference. Not so with exporters: 22% of Israeli exports are to European countries

Of money

Euro diver: reached 3.48, the lowest rate in 20 years

The European currency dipped this morning by 0.8% and traded at a rate of NIS 3.48 to the euro.

Israelis who will soon be flying to red Europe due to the fourth wave of the corona will be able to enjoy the difference.

Not so with exporters: 22% of Israeli exports are to European countries

In good time: The international super brand Kenneth Cole lands in Israel

To the full article

Euro at 20-Year Low: Vacationers Happy, Manufacturers Cry (Photo: ShutterStock)

Good for travelers, bad for exporters

The low euro exchange rate against the shekel makes Israelis' trips to Europe more affordable, when buying currency, booking hotels, cars for rent, shopping on European sites and more.

However, it should be taken into account that inflation in the EU is higher than in Israel due to the energy and raw material crisis, which has not been significantly felt in Israel so far.

To illustrate, in the last 12 months the consumer price index in Israel has risen by 2.3%, while in Europe by 4.1%.

So some products in Europe have risen in price at a higher rate in Israel and will be more expensive than in Israel despite the low euro.

Compared to ordinary citizens who benefit from the weakening of the euro, the situation of Israeli exporters working with European countries is becoming less good.

Exports to Europe is the second largest after the United States and accounts for approximately 22% of total exports. However, we can say that the collapse of the European currency trend has been continuing for many years is a trend that started yesterday, so they had an adjustment period low currency environment.

The volume of imports from Europe is the highest of total imports and accounts for about 27%. It was expected that the prices of imported products in Israel will fall as a result of the weakening of the euro against the shekel, but so far this has not happened due to several main reasons: Have risen at a higher rate than in Israel, and transport prices have soared.

Modi Shafrir, Chief Economist of Mizrahi Tefahot (Photo: Yachz)

The reasons for the sharp decline in the euro exchange rate

Modi Shafrir, the chief economist of Mizrahi Tefahot, explained in a conversation with Walla!

Money: "The euro / shekel exchange rate drops today to a low of the last 20 years (3.49) against the background of the combination of the sharp strengthening of the shekel against the currency basket - due to the 'basic forces' supporting strong shekels in the long run, massive foreign exchange sales by institutional entities In Israel against the background of rising stock indices around the world, and the Bank of Israel's announcement that it will complete its $ 30 billion foreign exchange purchase program in 2021, as well as against the specific weakening of the euro against the world dollar. The

weakening of the euro against the dollar "It will start raising interest rates in 2021, while the European Central Bank declares again that raising interest rates is not on the horizon."