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Israeli May Break with U.S. $

If the dollar’s value continues to rise, Israel may have to consider the possibility of discontinuing linking its Pounds to the dollar. This opinion was expressed by senior economic analysts who are in close contact with the Bank of Israel.

The dollar’s constant rise, six percent since the beginning of August, in comparison with the West German Mark, disturbs Israeli exporters to Europe who have gained from the recent drop in the dollar’s value. Before the recent jump in dollar value, Israeli exporters received more Pounds for their exports in Europe.

If the dollar continues to rise, the exporters may lose their gain, and the government may find itself in a situation in which it will have to compensate the exporters. One way of doing it could be to detach the trading rate from the dollar, which in fact would mean devaluation of the Pound. The Bank of Israel is hesitating to take such extreme steps, especially since under the current policy of cutting down inflation, every small devaluation could jeopardize those efforts by pouring larger amounts of money into the domestic economy.

Following reports to that effect in today’s press, the Bank of Israel issued a statement saying at the moment there are no plans to detach the Pound from the dollar. The statement stressed that even now, after the dollar’s relative pick-up, it is still 30 percent lower than its value 18 months ago.

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