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Business Operations Beginning to Feel Effect of Stock Exchange Closure

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The continued shutdown of the Tel Aviv Stock Exchange, now in its second week, is having a ripple effect on business. Investors, unable to liquidate shares, are finding themselves short of cash. Their creditors, with bills due, refuse to accept checks that may bounce.

Banks are willing to allow their customers to write checks substantially in excess of their balance– the traditional Israeli practice of overdraft — on which a high rate of interest is charged. But the banks have come under pressure to limit overdrafts and credit.

People short of cash are expected to sell the Dollars, bought only recently in face of a rapidly weakening Shekel. To do so involves a severe loss because the Shekel was devalued by 23 percent last week.

Dollars are still being sold, but at a limit of $3,000 per person. In an effort to ease the cash squeeze, the Treasury has postponed the monthly payment of the Value Added Tax (VAT) from the end of this week to the end of the month.

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