Since Gaza war, shekel has declined 15% against greenback, 7% against euro.

The shekel continued its nearly constant fall against the U.S. dollar and other major currencies yesterday, declining to a two-year low against the greenback.

To some extent, the explanation for the fall can be found in the form of a strengthening greenback rather than the weakness of Israel’s currency. In any event, however, the trend has consequences, both positive and negative, for Israel’s economy and directly affects consumers.

The dollar’s rise over the recent past has been attributed to the ongoing fall of global oil prices. This helps buttress the global economic recovery and is a source of economic growth in the United States. There are also forces, however, that are seen as weakening the shekel in particular, notably recent concern about the prospect of early elections in Israel as parties have jockeyed for power and as the passage of the 2015 budget has stalled. Concerns about possible deterioration of the security situation in Israel has also been a factor.

Yesterday the shekel fell by 0.64% against the American currency to a representative rate of 3.914 shekels to the dollar. Since the beginning of August, during hostilities between Israel and Hamas and its allies in Gaza, the shekel has declined about 15% against the greenback. The euro gained 0.81% against the shekel yesterday, rising to a representative rate of 4.876 shekels. The shekel has lost 7% of its value against the common European currency since the beginning of August.

A devaluation of the dollar is something that Israeli exporters have for quite some time been clamoring for, since a strong shekel increases the cost of Israeli goods sold abroad and makes them less competitive. The Israeli economy’s strong reliance on exports only underlines the benefits that may come from the current trend. Export oriented companies with production facilities in Israel, including Intel, Oil Refineries, Rafael Advanced Defense Systems, Keter plastics and Tadiran electronics, receive foreign currency for sales abroad but spend shekels to pay their employees’ salaries and to pay for raw materials. Other companies in Israel with global operations, such as Nice Systems, Amdocs, Check Point Software Technologies, Elbit Systems, Teva Pharamceutical Industries and Israel Chemicals, also stand to benefit from a devalued shekel.

The shekel’s fall is also good news for foreign tourists coming to Israel, particularly from the United States, the country that provides the largest number of tourists here. Israel will become a less expensive destination for them. Foreign tourism has been in the doldrums recently due to last summer’s war and the security incidents since.

The weak shekel is, of course, not good news for Israelis wanting to travel abroad. And even those Israelis traveling to Europe rather than the United States still have to contend with airfares priced in dollars, noted Ronen Carasso, the VP for marketing at the ISSTA travel agency.

Not all of Israel’s exports are priced in dollars, however. In its last monthly interest rate decision, the Bank of Israel noted that despite the rise in the value of the dollar against the shekel, Israel’s currency actually strengthened against the weighted basket of foreign currencies that reflects the relative share of currencies involved in Israel’s foreign trade.

Despite the devaluation against the dollar and the possible positive effects that this could have on the economy, the central bank declined yesterday to say whether it planned to revise its economic growth forecast for the country. At the Finance Ministry, sources said that the devaluation of the shekel should have a positive influence on the economic picture here next year, but in actual terms the devaluation has been limited in scope and in light of other factors that come into play, there is no reason to revise growth forecasts.

The latest Bank of Israel forecast projects 2.3% growth in the economy this year and 3% in 2015. For its part, the Finance Ministry forecast is for 2.4% growth this year – a bit higher than what the central bank projected, but the ministry predicts economic expansion of just 2.8% next year. Both financial agencies had downgraded their forecasts in light of this summer’s war and as a result of a slowing economic pace.

Although not as visible as the export trade, many Israelis have provident and pension funds that increasingly have been making investments abroad. If not for the funds arranged for currency hedging to offset the fluctuation of the value of the shekel, savers would have actually seen a 15% rise in the value of dollar-denominated investments since August, just as a result of the fall of the shekel. And that’s without taking into consideration the actual gains in the value of the securities themselves.

The surge in the dollar’s value since August has been seen against a number of currencies other than the shekel. The U.S. currency has risen 15.3% against the Japanese yen, 9% against the euro and 6.3% against the Swiss franc. The dollar has jumped even more against currencies in emerging markets such as Brazil’s real, which slumped 14% against the dollar. The Russian ruble has lost more than 50% of its value against the dollar, but that has been fed in part by Western economic sanctions against President Vladimir Putin’s regime.

The chief economist at the Meitav DS investment firm, Alex Zabezhinsky, said Israeli institutional investors are generally not hedging their investments against the dollar and instead are betting that that dollar’s rise will continue. The devaluation of the shekel, he said, will feed on itself, leading to further unhedged investments abroad that in turn will led to a further drop in the shekel.