When one of the world's largest technology companies comes knocking on your door, many would think this is manna from heaven. This is not the case though in Israel, as the sale of Waze to Google for an estimated US$1.3 billion would hurt the Israeli economy in the long run.
With the US$1.3 billion into the Israeli economy, the value of the US dollar would fall compared to the Israeli shekel. This would mean pressure on the exchange rate, which would hurt Israeli exporters as goods sold overseas would cost more dollars than prior to the Waze-Google deal,
The Israeli government, through its central bank governor Stanley Fischer has been trying to stem the tide. While he retires at the end of the month, he cut the interest rate by 25 basis points last May 13. He also introduced a US dollar purchase program to counteract the effects of pressure on the Israeli shekel. Another 25 basis points were cut again last May 27.
Unfortunately, these interest rate cuts though have not dented the effect of the US dollar, which is currently being traded at US$1 to 3.63 shekels.
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