It was a notable week in the Israel economy, including the passing of a nearly half-trillion shekel budget. Plus, caring doesn’t always mean sharing as far as the Tax Authority is concerned, and a welcome ray of sunshine for new home sales.  All that plus the Ministry of Labor looks to kill a little time, and our trading desk projects volatility as the flavor of the week. Ready to catch up on what you may have missed? Then read on and let’s get to it. 

Israel Economy Snapshot

Although political turmoil may have stolen the headlines last week, not to be overlooked in the shuffle was the official passage of the State’s 2019 budget by the Knesset.  After breezing through its first reading, the nearly 480 billion NIS budget eventually passed after a grueling, nearly 24-hour session. Highlighted by the Family Net program, the comprehensive budget also includes national long-term nursing care, lowering the prices of private surgical procedures, a shorter working week, sports betting reform, restrictions on the use of cash, and boosting housing supply, just to name a few.

In other economic news, Israel received high praise from the Organization for Economic Co-operation and Development (OECD) in its latest bi-annual report. The findings showed that Israel’s economy continued to register “remarkable macroeconomic and fiscal performance” and that it expected a major payoff to come from planned investments in offshore natural gas fields. That said, while low-inflation has consistently kept Bank of Israel from raising interest rates in the past, the OECD did warn that should Bank of Israel wait too long on rate hikes in the future it could increase the risks of economic overheating and rising wage pressures.  Elsewhere, the OECD was very complimentary of Israel’s efforts to decrease its public debt, however, cited education, transportation, and tax collection as areas where the State has room to improve.

From the IsraTransfer Trading Desk

Volatility was the big expectation last week, as is typically the case with the reduced trading volume that customarily leads up to Pesach holiday.  Somewhat surprisingly, the markets stayed relatively calm, especially in the face of global political unrest that included President Trump firing his Secretary of State via Tweet!.  This week should be different, as again we move closer to Pesach, England’s continued Brexit, Russian diplomatic drama, and Irish border problems, as well as another round of personnel turnover in the Trump administration.  As such, we still suggest those looking to exchange to USD and GBP to shekels take advantage of “up days” in the market.

Looking at market fundamentals, this week marks the first US interest rate decision by the Federal Open Market Committee and its newly appointed chairman, Jerome Powell.  Don’t be surprised to see the markets respond positively on the announcement as a clearer picture of the type of chairman he may be comes more into focus. Economic data in the UK could also serve to steer markets with Bank of England’s own interest rate decision on Thursday, as well as inflation and employment data.  Of course the biggest factor in GBP trading should come at the end of the week when the heads of European Governments meet, and the markets will be looking to see if there is any progress on, what else, Brexit.

Stay on top of daily trading in the shekel, plus notable news, economic announcements and more with IsraTransfer’s free Daily Shekel Report newsletter.

Bank of Israel Representative Rates

For the Week of March 12th thru March 16th, 2018

Currency
Week High Week Low Week Close
US Dollar (USD)
3.4693 3.4218 3.4580
British Pound (GBP)
4.8255 4.7671 4.8227
Euro (EUR)
4.2712 4.2313 4.2521
Australian Dollar (AUD)
2.7241 2.6665 2.6684
Canadian Dollar (CAD)
2.7067 2.6373 2.6406
South African Rand (ZAR)
0.2929 0.2883 0.2887
Swiss Franc (CHF)
3.6516 3.6194 3.6316

Source:  xe.com

Israel Real Estate

Jerusalem real estate

The Israel real estate market finally received some positive news last week as data showed a 10% uptick in new home sales from the month prior.  Welcome news coming off the heels of last week’s somewhat less-than-rosy housing market outlook by Bank of Leumi.  Helping to lead the recovery were 500 apartments sold in the month as part of the government’s Mechir Lamishtaken program for first-time buyers.  While certainly encouraging, the 1,900 new homes sold still reflects a decline of 15% from the same time a year ago.

New Israel Business Hours

In the spirit of Pesach Israel’s workers will be rewarded with some additional freedom of their own thanks to the Ministry of Labor.  Beginning April 1st, the Israeli working week will be cut by one hour without any reduction in employee pay.  Going forward, hourly pay will be based on 182 working hours per month rather than the 186 hours currently employed, resulting in a raise in the hourly rate for workers on the minimum wage as well.  The decision marks the first time since 1995 that working hours have been cut, resulting in a new work week of 42 hours, as the government inches closer to its long-term goal of 40.

Not So Hospitable Tax Treatment

It seems Israel’s war on the cash economy is growing.  In perhaps his final salvo before leaving his post as Israel Tax Authority director at the end of the week, Moshe Asher, has taken aim at Israel’s burgeoning “sharing economy.” The potential legislation includes a proposed reduced flat tax between 15-20% on those using their personal assets and resources to generate income of up to 25,000 NIS.  Additionally, enforcement measures intended to root out tax evaders are also part of the recommended plan.

Beyond the financial implications behind the new law, finding ways of streamlining the reporting process and eliminating red tape is also a major focus in the plan. As such, the Tax Authority envisions making it as simple as filling out a simple tax return on the internet of their relevant transactions, and simply paying the flat tax derived from it. The proposed strategy is not too dissimilar to the current rental income structure centered around a tax rate low in relation to the regular tax brackets, as well as offering simple reporting to the Tax Authority.

Ok everyone, consider yourself officially caught up.  Have a very productive and prosperous week from IsraTransfer.


Looking for the easiest way to transfer money to Israel? IsraTransfer Ltd. is Israel’s leading currency exchange firm specializing in wire transfers of US dollars (USD), British sterling (GBP), Canadian dollars (CAD), euros (EUR), and more to Israel.  Founded in 2008, and with over 1 billion NIS exchanged, we are the exclusive operators of the AACI Currency Exchange Program.

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