A dollar
The dollar had dropped to 3.4815 shekels by late Tuesday. Photo by AP
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The U.S. dollar rose nearly 0.9% against the shekel on Friday, with the representative rate reaching a three-year high of NIS 3.915. The euro also rose, by about 0.25%, to NIS 4.829.

The continued rise in the value of the American greenback against the Israeli currency over the past several weeks is good news for Israeli exporters, whose wares will become more competitive because they can be priced more cheaply in dollars for the same return in shekels. Exporters have complained in recent years over the high value of the shekel against the dollar. The development is less significant in the high-tech sector, however, where profit margins are higher and where they have not suffered substantial export declines over the past year despite the global economic crisis.

The devaluation of the shekel against the dollar is bad news for importers of products to Israel, who have seen prices for their merchandise rise in shekel terms in recent weeks. Nonetheless, the maximum selling price for gasoline declined, because the dollar's rise was more than offset by the drop in oil prices.

The U.S. dollar was trading Friday at $1.239 to the euro, a two-year low in the value of the European currency. The vigor of the greenback is an indication of the continued dominance of the U.S. dollar around the world, where it has demonstrated strength despite the weakness of the American economy.

The expectation in the currency markets is that the rise of the dollar will continue against the euro and other currencies, including the shekel, with analysts here expecting the American dollar to quickly climb beyond a rate of NIS 4. This is coming against the backdrop of concern over the stability of the eurozone, particularly over the prospect that Greece and maybe even other countries will be forced to give up the single European currency. The next major event in the drama is the Greek election in two weeks' time.

Economic sources in Jerusalem believe the Bank of Israel could attempt to take advantage of the strength of the dollar when it thinks best to sell some of the stockpile of about $77 billion that the central bank has accumulated in recent years. That would reduce the Israeli central bank's large losses from the purchase of dollars in recent years.