Tech sector hit by rapid shekel surge

(TIMES OF ISRAEL) Israel’s Finance Minister Bezalel Smotrich last Tuesday presented a NIS 1.6 billion ($776 million) assistance package intended to help Israeli startups and tech firms cope with the steep appreciation in the shekel, which harms their competitiveness and makes operations in Israel costlier and less viable.

“We now understand the great challenge facing Israeli high-tech, which is a combination of the AI revolution, coupled with the vast appreciation of the shekel,” said Smotrich.

“The problem is not the strong shekel rate as it is probably going to be the new normal, which in itself is an expression of the strength of the Israeli economy … the problem is the rapid pace at which the shekel has strengthened and the difficulty and challenge of export-oriented industries in adapting to changes at such a pace.”

For weeks, local tech exporters and manufacturers have been warning that the strength of the shekel, which last month reached a 33-year peak against the US dollar trading at around 2.80, poses a serious risk to major growth engines of the economy. Year-over-year the local currency has been strengthening by more than 20 per cent against the US dollar.

The lion’s share of the new assistance program, budgeted at NIS 1 billion, is being allocated to a fast-track funding support program operated by the Israel Innovation Authority. The support program is geared to help young and cash-strapped, as well as more mature, growth-stage technology companies navigate the financial impasse created by the strong shekel.