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Last update - 01:41 27/06/2008 Senior bankers: Strong shekel a strategic threat to Israeli economy By Shaon Shpurer, TheMarker Correspondent Tags: dollar, Israel, shekel "If the cabinet and the Bank of Israel do not deal with the exchange rate problem, it will be very bad here. The strong shekel, compared to the dollar and euro, is a strategic threat to the [Israeli] economy. It is simply awful. Many companies and industries are in real danger," senior banking executives told TheMarker on Thursday. According to the bank officials, firms that sold their products a year ago at an exchange rate of NIS 4.5 to the dollar cannot continue to operate at an exchange rate of NIS 3.3 per dollar. "No one has such high profit margins of over 30%. The firms are eating up their equity and the stage will come when they can no longer withstand the economic pressures and they will collapse," said the bankers. Advertisement The executives said they have identified a particularly critical situation in the kibbutz industries, since they have entire factories based on Israeli labor and export all their products - in other words, their expenses are almost entirely in shekels while their revenues are almost all in dollars. Maalot lowers rating on banks' notes The bankers seemed to have proved their point when ratings agency Standard and Poor's Maalot lowered the rating of all the deferred notes of Israeli banks by one level on Thursday. These deferred notes are similar to bonds issued by the banks, but are considered inferior to bonds as they have a lower priority if the bank defaults and are usually rated one step lower than a bank's bonds. Therefore, the notes are also considered differently in calculating the banks' capital. Today, Israeli banks must have a minimum capital ratio of 9%, but the Bank of Israel's Supervisor of Banks, Rony Hizkiyahu, has made it clear that he wants to raise this amount to at least 12%. In response, the banks have been raising billions of shekels since the beginning of the year, and the fundraising is expected to continue in the second half of 2008 too, as well as into 2009. As a result of the lower ratings, the banks are expected to have to pay higher interest rates on the funds they raise. Related articles: Fischer: Battle with inflation, recession may have negative effects soon Strong shekel battering kibbutz exports Treasury buying up cheap dollars Bookmark to del.icio.us   A fateful week We shall see whether the truce will help bring Gilad Shalit home. Munich massacre anticipated? A German professor says Israeli athletes willfully sacrificed themselves in Munich massacre.   1.   Oh! What we were talking about! 22:08  |  Ulf 27/06/08   2.   utter nonesense 04:56  |  yohann 29/06/08   3.   #2 It is Both: Shekel over and dollar under 11:24  |  Ulf 29/06/08

Read & React German prof.: Israeli athletes willfully sacrificed themselves in Munich massacre Responses: 48 PM aide: Hezbollah deal has passed point of no return Responses: 1 Harel and Issacharoff: Five myths about prisoner swaps Responses: 26 Former Israeli spymaster: Israel has one year to bomb Iran Responses: 18 Zvi Bar'el: Israel would rather deal with militants than states Responses: 1 Rosner's Domain Can Israel legaly attack Iran with nuclear weapons? Is Time's Joe Klein being honest when he criticizes Joe Lieberman? "The war in Iraq was inevitable" (WTR) Poll: exchange deal with Hezbollah, good or bad? Do Jews have special responsibility over Darfur? (WTR) More Headlines 12:10 PM aide: Hezbollah deal passed point of no return 10:13 ANALYSIS / Five myths about prisoner swaps 11:40 Former Israeli spymaster: Israel has one year to bomb Iran 10:12 Report: Hamas rejects Israeli bid to free 450 prisoners for Shalit 10:11 Israel reopens Gaza crossings after closures over Qassams 07:14 Bereaved father: Who will protect my sons once terrorists are released? 11:35 Peer shocks Safina to slide into Wimbledon fourth round 12:09 Amy Winehouse reportedly punches fan at Glastonbury music fest 11:57 Court to debate Arab petition to nix preferential education benefits 10:31 Palestinians: Israeli troops kill teenager in West Bank 07:29 MKs prepare for bills making it harder to cede parts of Jerusalem 09:54 Overnight road accidents claim two lives 07:18 Ex-POW: Don't declare troops dead, as I was Previous Editions Select Day 27 jun 26 jun 25 jun 24 jun 23 jun 22 jun 20 jun 19 jun 18 jun 17 jun 16 jun 15 jun

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