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Trading in U.S. Dollars Continues As Usual Following Devaluation

Trading in US dollars continued as usual this morning following the announcement of an 8.57 percent dollar devaluation. Trade in other foreign currencies was suspended pending clarification of the monetary situation and an announcement of new rates of exchange expected tomorrow. Finance Minister Pinhas Sapir told newsmen today that there will be no further devaluation of the Israel pound which continues to be pegged to the dollar. The IL was reduced 20 percent last Aug.–from 3.50 to 4.20 to the dollar.

Sapir said the lifting of the 10 percent import surcharge, announced yesterday by President Nixon, should spark greater efforts by Israel to increase its exports to the US. He said Israel’s goods will also have a better chance of competing in Europe because of the more favorable rate of exchange, though the amount of improvement will depend on the new exchange rates to be announced. Israeli businessmen and industrialists predicted today that imports would be more expensive and exports, in some cases, increased. Abraham Shavit, deputy president of the Israel Manufacturers Association foresaw a general price increase for imported raw materials.

He said the removal of the American import surcharge would have little effect on Israel since most of its exports to the US were exempted anyway. Avner Ben Yakar, president of the Chamber of Commerce, said the American devaluation would have little impact on Israel’s economy inasmuch as the free exchange rates since last Aug. were more or less similar to the present new rate. Importers of electrical appliances foresaw a steep increase in their price. They said appliances from West Germany would be much more expensive than others. The new rate of the West German mark is expected to increase the prices of imported West German cars by several hundred dollars.

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