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In an attempt to limit the damage from the falling dollar, the high-tech industry association advised its member CEOs to stop converting dollars into shekels every month.

Zohar Zisapel, chairman of the Israel Association of Electronic and Software Industries, sent the companies a letter late last week, advising them to deposit their earnings in dollars, and to use this as security for shekel loans to pay monthly expenses like salaries and taxes.

Zisapel said the large high-tech companies welcomed his suggestion, and are planning to follow it. The Israel Venture Capital Association, which is considered a linchpin of the local high-tech industry, also applauded the idea.

Zisapel's suggestion is based on the assumption that the dollar is close to its nadir, and will rise against the shekel in the coming months. The weak dollar has forced exporters to convert a larger number of dollars into shekels in order to pay monthly wages, raising the dollar cost of a high-tech engineer in Israel relative to other developed countries.

"Such a shekel loan would be for the company's shekel payments," Zisapel writes. "The annual cost of such a move, including interest, is 1.5%. The purpose is to boost the dollar-shekel exchange rate, preserving the high-tech industry's competitiveness and growth. Since the dollar is more likely to increase than to drop against the shekel in the immediate future, the risk involved in such a move is low. Such a move will allow the high-tech industry to improve its shekel earnings immediately, without waiting for Bank of Israel or government involvement."

Israeli high-tech companies spend about NIS 1 billion every month. They pay some NIS 500 million in wages at the beginning of the month, and another NIS 250 million in National Insurance, income tax and benefits like pension plans in the middle of the month.

"These payments are carried out by selling dollars and converting them into shekels," Zisapel writes. "Foreign trade data show a drop in the dollar exchange rate on the 1st and the 15th of every month."

"Banks and speculators, which are aware of the constraints on the high-tech industry, take advantage of their need to convert dollars on these dates," he added.

Zisapel also said that the central bank has decided to take action to boost the dollar, by buying up $10 billion over a period of two years. High-tech companies convert a similar amount over a period of 10 months. "I would be happy if companies from other export-heavy industries, like Iscar and others in the precise mechanics industry, would join the move, which could be relevant to them as well," he said.

Zisapel expressed concern over the affect of the dollar exchange rate on high-tech industry profits. In the past, he has noted that some companies are considering moving their production lines to other developed countries, where the cost of engineers is lower than it is in Israel. The association's heads are scheduled to meet with Finance Minister Roni Bar-On to review possible government assistance.