Updated: Jun 29, 2020
IsraTransfer brings you our monthly report on Israeli's currency, start-up scene and more. Click here to get the IsraTransfer report delivered to your inbox each month.
From the IsraTransfer Trading Desk
As far as the currency markets are concerned, these last few months have been some of the craziest and most unpredictable we've ever witnessed.
Although the markets seemed to have settled a little in the last couple of weeks, it is not great news for purchasing shekels. The shekel is showing considerable strength against most major currencies, a phenomenon mainly due to the market's perception that the Israeli economy is recovering relatively quickly compared to the rest of the world. This is especially true when compared with the US economy, which explains the low dollar vs. shekel rate.
Many top analysts believe that the real exchange rate should be closer to the 3.60-3.70 range. Although that's hopeful for now, it is realistic to assume it will settle in that range once the Corona crisis settles down.
The sterling seems to be mirroring the dollar, which is no surprise. The markets are reflecting the UK's struggle to come out of Corona Lockdown and looming Brexit deadlines.
Is the Shekel Backing Down?
The already strong shekel has continued to hold its own even though the current global economic crisis. Although it experienced a blink-and-you-missed-it weakening early on in the corona outbreak, the shekel is has been the second-best performer globally against the dollar since mid-March with a gain of over 8%. But some experts believe that trend may be changing. According to Bank Leumi chief economist Gil Bufman, the shekel's appreciation could be attributed to Israel's account surplus and is possibly due to projections of a quick recovery from the current crisis. With the current fiscal policy taking an expansionary flavor, things could start to look different. Failure to bounce back or continued deflation could prompt the Bank of Israel to drag the interest rates into negative territory.
Financial consultant Yossi Frank is reasonably certain that the shekel is heading South in his article 10 Reasons the Shekel will Weaken Against the Dollar. Frank estimates the shekel will soon be trading in the NIS 3.60-3.75/$ range. Reasons for the currency's likely decline include a projected decrease in exports, reduced account surplus, falling stock exchanges leading to foreign currency purchase, the worsening US-China crisis, a potential interest rate cut, rising regional political tensions, and more.
While it is impossible to predict the shekel's direction with certainty, many will be keeping a close watch in the coming months.
Coron-Aliyah on the Rise
The global pandemic seems to be inspiring a new trend: a rise in the North Americans filing for aliyah. According to Nefesh b'Nefesh, there were double as many applicants in May 2020 as in May 2019. The applicants' profiles had shifted as well, with a significant increase in families (as opposed to individuals) looking to build their homes in Israel.
There has also been a drastic increase in aliyah inquiries, over 10,000 compared with half the amount in the same month last year.
Coronavirus seems to be the primary motivator, as it's causing American Jews concern regarding their futures. Many prospective Olim expressed their anxieties when interviewed about their reasons for moving. Some individuals expressed fear surrounding theworldwide rise in anti-Semitism sparked by the pandemic. Jews have gotten blamed for the current outbreak and are concerned they may be easy scapegoats as more and more people lose their jobs.
Other reasons include a perception that Israel is safer in terms of corona. The government was quick to shut the country down and contain the spread of the virus in a way that didn't happen in North America.
Many are simply turning lemons into lemonade. They examine their current struggles with lock-down induced financial stress or job loss as an opportunity to do something they've always wanted to do anyways: build a future in the Holy Land. For that dream, they are willing to endure a two-week quarantine and risk leaving their old lives behind.
Israeli Innovation Goes Pandemic Style
Although many businesses are feeling the pain of the tightening economy, some Israeli startups are rising. Houseparty, an app made in Israel that is giving zoom a run for its money, provides a platform for "parties" of up to eight people to celebrate or socialize in virtual rooms. With screen sharing abilities and lots of group games, it's no wonder that Houseparty became a hit during the lockdown. The Israel based company MeMed Diagnostics Ltd developed a test that can quickly determine whether an infection is viral or bacterial. With the current pandemic, their new developments are more crucial than ever. The technology can test an individual's immune system response. MeMed's current focus is a test that diagnoses the severity and progression of an illness as well so that medical professionals can determine how best to care for the patient. They also created a test for diagnosing a disease before the sick person has any symptoms, research that is beneficial during the current crisis. Face masks become a hot commodity, and the highly protective N95 masks run the risk of being in low supply. Although effective, they must be disposed of after wearing and can be costly as well as scare. A group of Israeli scientists came to the rescue as they submitted a patent for a reusable, self-disinfecting face mask. The disinfection process is heat-based and can be generated from something as simple as a phone charger. If they come to the market soon, these masks may help slow the spread of the virus while becoming the latest fashion trend.
In Case You Missed It...
Ikea Opened in Beit Shemesh!
When it comes to Ikea, nothing will stop the madness. Ikea launched its highly anticipated Beit Shemesh branch, despite coronavirus restrictions, and people couldn't wait to start shopping. The 25,000 square meter store is the 6th to open in Israel so far. It employs 380 people and includes a parking lot with 900 spaces. Due to current health regulations, anyone entering will have their temperature taken and is required to wear a mask. Ikea is a favorite for locals, and we're certain that restrictions or not, the store will be busy.