American olim, the Hebrew word for immigrants, who held on to their dollar bills the past three years will have lost 15 percent of their money if they convert the dollars to shekels today.
The dollar traded Friday morning as low as 4.233 shekels, the lowest it has been for five years. The year-long long and steady strengthening of the shekel symbolizes the new Israel, an economy of near-zero inflation, a robust economy and a growing reputation among the international financial community as one of the most stable economies in the world.
The stronger shekel is a boon for renters and buyers because the long-time trust in the dollar steered Israelis to quote everything in dollars. A $500 a month apartment costs five percent less in shekels than it did six months ago.
Today, businessmen and consumers see the other side of the coin and the shekel is becoming the more common base for transactions.
The past, of course, is no guarantee of the future, and many financial advisors think the shekel is overvalued. One financial web site wrote on Friday, "While we in the beginning of the year where quite bullish on shekel we are now increasingly of the view that the shekel will weaken."
Their analysis is based on the prediction that the American interest rate will rise, contrary to most expectations that it will drop in early 2007. One of the advantages of the shekel is that the interest rate in Israel has been the same or even higher than that of the dollar, attracting foreigners to invest in the Israel currency and earn a higher income.
Another factor working against the dollar is the increasing flight from the American currency throughout the world. The shekel's strength has been aided by the dollar's weakness, whereas the shekel continues to lose value against the Euro.
Israel today is a far cry from the days of 500 per cent a year inflation of the 1980s, when shop owners marked up their prices every day.
Sweeping economic reforms and changes in the financial policy have turned the Israeli economy around. The most flattering result was this year's $4 billion buy-out of the Iscar metal working company by American billionaire Warren Buffet. He bought the Galilee-based community only months before the Hizbullah terrorist war broke out.
The ability of the economy to absorb the shock of the war and return to a growth rate of more than four percent is another sign to investors that the shekel is the best place to put money.
The constant instability of the Middle East has had virtually no effect on the shekel or the economy, and the government even has massed an enormous and little publicized budget surplus of more than $2 billion. American President George W. Bush recently asked Prime Minister Ehud Olmert how Israel manages to avoid deficits, which two years ago were a constant and growing concern.
The government has made windfall profits from the tax on fuel, which has soared in the past year until it peaked in the late summer. Every time fuel pump prices were raised, the government's take rose proportionately.
Another large source of the surplus has been a drastic cut in outlays for child stipends following the sweeping reforms initiated by former Likud Finance Minister Binyamin (Bibi) Netanyahu. The child support benefits for years have been a way to support a needed rise in the Jewish population. However, in the past few years it has been used by Arab families, especially in the Bedouin community, to fund their lifestyle of polygamy, which often results in dozens of children per family.
The dollar traded Friday morning as low as 4.233 shekels, the lowest it has been for five years. The year-long long and steady strengthening of the shekel symbolizes the new Israel, an economy of near-zero inflation, a robust economy and a growing reputation among the international financial community as one of the most stable economies in the world.
The stronger shekel is a boon for renters and buyers because the long-time trust in the dollar steered Israelis to quote everything in dollars. A $500 a month apartment costs five percent less in shekels than it did six months ago.
Today, businessmen and consumers see the other side of the coin and the shekel is becoming the more common base for transactions.
The past, of course, is no guarantee of the future, and many financial advisors think the shekel is overvalued. One financial web site wrote on Friday, "While we in the beginning of the year where quite bullish on shekel we are now increasingly of the view that the shekel will weaken."
Their analysis is based on the prediction that the American interest rate will rise, contrary to most expectations that it will drop in early 2007. One of the advantages of the shekel is that the interest rate in Israel has been the same or even higher than that of the dollar, attracting foreigners to invest in the Israel currency and earn a higher income.
Another factor working against the dollar is the increasing flight from the American currency throughout the world. The shekel's strength has been aided by the dollar's weakness, whereas the shekel continues to lose value against the Euro.
Israel today is a far cry from the days of 500 per cent a year inflation of the 1980s, when shop owners marked up their prices every day.
Sweeping economic reforms and changes in the financial policy have turned the Israeli economy around. The most flattering result was this year's $4 billion buy-out of the Iscar metal working company by American billionaire Warren Buffet. He bought the Galilee-based community only months before the Hizbullah terrorist war broke out.
The ability of the economy to absorb the shock of the war and return to a growth rate of more than four percent is another sign to investors that the shekel is the best place to put money.
The constant instability of the Middle East has had virtually no effect on the shekel or the economy, and the government even has massed an enormous and little publicized budget surplus of more than $2 billion. American President George W. Bush recently asked Prime Minister Ehud Olmert how Israel manages to avoid deficits, which two years ago were a constant and growing concern.
The government has made windfall profits from the tax on fuel, which has soared in the past year until it peaked in the late summer. Every time fuel pump prices were raised, the government's take rose proportionately.
Another large source of the surplus has been a drastic cut in outlays for child stipends following the sweeping reforms initiated by former Likud Finance Minister Binyamin (Bibi) Netanyahu. The child support benefits for years have been a way to support a needed rise in the Jewish population. However, in the past few years it has been used by Arab families, especially in the Bedouin community, to fund their lifestyle of polygamy, which often results in dozens of children per family.