Strong shekel squeezes value of export sales, as industry warns of damage to economy

The shekel’s sharp appreciation reached new peaks for positive reasons, but the strong currency is translating into losses across major export sectors of the local economy, according to manufacturers.

While industrial export sales grew in the first four months of 2026 in dollar terms, the shekel’s 12 percent increase against the dollar this year has eroded those gains when measured in local currency terms, according to an analysis by the Manufacturers Association of Israel (MAI), based on figures by the Central Bureau of Statistics.

Exports rose 5 percent in dollar terms in January-April year-on-year, from $17.5 billion to $18.3 billion. But when converted into shekels, the value of export sales dropped by almost 11% from NIS 63.4 billion to NIS 56.7 billion during the comparative period, according to the MAI. Due to the fast appreciation of the local currency against the dollar, export revenue in shekel terms shrank by more than NIS 6.5 billion ($2.25 billion) compared to the same period last year.

Exporters, which include most high-tech firms, traditional manufacturers, and multinational companies, earn their money chiefly outside Israel and are paid in dollars. But they pay workers’ salaries, overhead costs, taxes and other expenses in shekels, and these have all become more expensive due to the strength of the local currency.

According to the MAI, the decline in exports in shekel terms affects almost all sectors. High-tech industries, which constitute about 42% of total exports, recorded a 4.6% increase in dollar-denominated sales, but when translated into shekels, fell by 11%, translating into a loss of about NIS 3 billion. Within traditional manufacturing industries, export sales dropped 4.3% in dollar terms, which, when converted into shekel terms, amounted to a decrease of 18.3% — a loss of about NIS 900 million.

Sign up for the Tech Israel Daily

and never miss Israel's top tech stories

By signing up, you agree to the terms

The dwindling revenue for exporters as the shekel recently hit a 33-year high against the dollar is forcing them to make tough decisions about investments and job cuts, which are feared to impede growth prospects, as exports make up as much as 40% of Israeli economic activity.

Over the past year, the shekel has risen by about 20% against the dollar despite an economy strained by military campaigns in Iran, Lebanon and Gaza. The strength of the local currency has been driven by growing stock purchases in the Israeli market by local and foreign investors, amid optimism about an improved geopolitical environment, global dollar weakness, and inflows of foreign capital into local companies.

MAI President Avraham Novogrocki on Wednesday urged Prime Minister Benjamin Netanyahu to personally take action and resolve the exchange rate crisis before it is too late.

Novogrocki warned that the continued rise in the local currency will have broader consequences, including reduced investments, layoffs, and a relocation of tech and multinational companies to cheaper markets abroad.

“A factory that closes its doors will not open again in Israel,” said Novogrocki. “If the current shekel trend continues, it will lead to a mass brain drain and heavy unemployment.”

“The government needs to wake up, provide fair competition conditions, and protect jobs, because the local industry is our future,” he cautioned.

In response, Finance Minister Bezalel Smotrich instructed his ministry to create a dedicated task force to help Israel’s technology sector cope with the effects of the shekel’s sharp rise in value. The move comes after local tech exporters and manufacturers warned in recent weeks of the increasingly damaging impact of the strong currency on Israel’s industry and economy, while urging the Bank of Israel and the Finance Ministry to intervene.

Last week, major Israeli tech companies Wix, Rapyd and Amdocs all announced significant layoffs, partly citing increased costs of hiring local staff paid in local currency.