If you have been following financial news lately, you would have noticed that the majority of economic powers are struggling to keep their heads above water.
The US sequester began on March 1, the EU economies are continuing to suffer, and the UK credit rating was recently downgraded.
On the other side of things, the Shekel seems to be taking the cake when it comes to relative economic strength lately.
The rates we are seeing today in Israel have not been this low for over a year! While importers are enjoying this time of relative strength, as they are paying less for goods they are importing.
On the other hand, exporters are definitely not happy! But don't fret.
If you are in the market for better (higher) Shekel foreign exchange rates, you just might get your wish soon.
Here are 4 reasons why the Shekel may weaken against the major currencies in the next few months.
1.
Intervention The Bank of Israel has quite a job to do in keeping the balance of Shekel rates versus foreign currencies.
In fact, since 40% of the country's GDP is derived from exports, it generally stimulates the economy if the Shekel stays a little on the weaker side.
Experts agree that if the Shekel gains too much ground in the next weeks the Bank of Israel will step in by possibly lowering interest rates and/or buying foreign currency and selling shekels.
Intervention like this will only devalue the Shekel until it gets to a point where the Bank of Israel is more comfortable.
2.
Politics Messy elections are always a game changer for economic stability.
Although we did see some conflict over various ministerial positions, the government is starting to come together with a fairly large coalition.
However, politics and politicians being what and who they are, it is yet to be seen how the rest of the world will take to the various ministers sitting in the new Knesset.
A new government that has been disrupted with new players and new ideals has to prove its abilities.
After the last elections in 2009, in which we saw a winning party lose the Knesset because it could not form a coalition, the Shekel saw a drop from 4.
2 to 3.
6 vs the USD and similar drops against other currencies.
3.
War The ever-looming threat of war in the Middle East is usually overrated in terms of economic stability.
Mainly it just gets a lot of press, but that doesn't mean anything is going to happen.
That being said, we have seen some signs as of late that the threat of war might be more serious with the recent Syrian civil war and continued Iranian nuclear testing.
War means instability and bloated defense budgets - which means the economy stalls.
4.
Passover You probably didn't expect this last one, did you? Passover is a static period in Israel as the country basically shuts down and we head to family vacations leaving business behind for a while.
Looking at Passover last year, the Shekel was very strong· similar to the rates we are seeing now.
But within three weeks starting from Passover, the USD/ILS rate jumped almost 2.
5%.
That run actually brought the Shekel to its highest rate in about four years, topping off around 4.
082.
As with anything in this world, fortunes can change very quickly.
Any major occurrence in the US, UK, or EU could immediately affect the rates.
However, taking the information we have now, it appears that these factors could cause foreign currency holders to rejoice, and not just over wine and matzah!