The prospect that the US dollar may be devalued does not disturb Israeli officials. Finance Ministry circles told the Jewish Telegraphic Agency today that the effects of devaluation would be negligible. However, they said Israel’s economy could be adversely affected in the long run if prices rose sharply in the US in the aftermath of devaluation. The Israeli pound is pegged to the dollar by law at the rate of IL4.20 to $1 dollar.
If the dollar is reduced in value, Israel would have to pay more to hard currency countries in Europe for imports but those constitute only a small portion of Israeli purchases abroad and are counterbalanced to some extent by Israeli exports to Europe. Most of Israel’s foreign currency reserves are in West German marks which are expected to be reevaluated upwards. Such a move would result in a “paper gain” for Israel’s foreign currency holdings for which the accounting is done in dollars. The Israeli pound may be detached from the dollar only by Cabinet decision subject to approval by the Knesset.
The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
