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Finance officials are forming a united front against exporters' demand that they stop the shekel's appreciation in its tracks by slapping a tax on currency speculators - namely, foreign investors who zip in and out of the shekel.

"It's basically an elegant way to ask for exports to be subsidized," sniffed a top treasury official yesterday.

Exporters have been losing sleep over the shekel's appreciation in the last four months, especially after the Bank of Israel stated that it would stop buying foreign currency every day, and intervene in the forex market only when it noticed a market failure.

Demand for Israeli exports is low to begin with because of the global economic crisis, say exporters. The crisis isn't actually over yet despite the general upswing in sentiment, and the strong shekel is hurting the exporters' profits to the point of imperiling whole companies, they say. The stronger the shekel, the more potential for job losses.

At first exporters placed their hope in help from the Bank of Israel, which for more than a year bought $100 million a day on the open market, boosting the dollar against the shekel. But obviously that couldn't continue forever. Now the export sector is casting its collective eye on government, to the dismay of treasury officials, who oppose the call for tax on speculative gains.

The dollar's dive against the shekel in the last year wasn't any worse than its drop against other currencies, point out treasury officials. In other words, Israel is part of a global trend, which cannot be foiled by supporting the dollar in the local currency market.

Artificial exchange rates are a stupid idea, say the officials: They shackle monetary and budgetary policy, the latter because of the need to protect the exchange rate.

Any tax on speculation would have to be based on "short-term" capital movements. But it's impossible to differentiate between short-term movements for speculative purposes and short-term movements by exporters buying exchange rate insurance, the ministry officials point out. By demanding tax on speculators, exporters may well be shooting themselves in the foot, say the officials.

And in summary, the officials point out that other countries have spectacularly failed in their efforts to impose tax on speculators: Brazil, Chile, Colombia and Malaysia wound up paying a heavy price, they say. Allocation became warped, credit became expensive and the administrative costs of imposing the tax were sky-high.