How the dollar exacerbated the suffering of the Palestinians?

Atef Daghlas-Nablus

Since receiving his salary earlier this month, the Palestinian youth Abdul Aziz Saleh (38 years) has converted to the currency in circulation gradually and not at once as usual, trying to avoid any losses in the exchange rate of the US dollar, which receives his salary against the Israeli shekel most traded among the Palestinians.

For more than three months, the dollar has fallen against the shekel (the dollar equals 3.49 shekels), and many, particularly those who are paid in dollars or Jordanian dinars, are also worried.

Since working with a global company in the field of electronic and Internet networks more than 15 years ago, Abdul Aziz has received his salary in dollars and transfer it at once to the Israeli shekel, so as to avoid fluctuation in the exchange rate and currency differences, yet lose part of his salary expecting that the loss will double if this continues The decrease, especially as the operator does not compensate for this loss.

Like Abdel Aziz, an employee of an educational institution in Nablus, Samih Eid, was facing the same problem several years ago, at which time the dollar exchange rate fell and reached a low level, but his institution compensated him and other employees by giving him the price difference and fixing the salary at a certain amount.

The strength of the shekel
In the absence of the Palestinian currency, the Palestinians are trading at least four currencies: the US dollar, the Jordanian dinar, the European euro and the Israeli shekel, which makes them always insecure.

Financial expert Mohamed Salama believes that the dollar's decline or rise is caused by the nature of each currency and its advantages, as is the case of the Israeli shekel.

In terms of numbers, Salama explained to Al Jazeera Net that economic growth in Israel is 3%, unemployment is around 3% with no inflation, and that the Israeli shekel is supported by a balance of payments and a balance of foreign currencies, especially from European Jews who turn to the Israeli shekel as a safe haven such as the Japanese yen and the Swiss franc. This strengthens the Israeli shekel.

The lack of clarity and confusion in international markets and the problems of international trade strengthens the shekel. "Israeli companies on the Nasdaq and technology companies are performing well," he said. "There is foreign investment in these companies that leads to an increase in demand for the shekel and maintain a good level compared to second currencies." .

He added that the strength of the shekel against the basket of currencies is at its highest level, which has not happened historically, the pound sterling against the Israeli shekel at its lowest level (sterling 4.2 shekels) due to the Brexit file, which is an indication that the shekel is a strong currency and demanded by many Especially from Israel's trading partners such as Britain, Turkey, China and others.

Negative reflection
According to Salameh, the shekel should be positive for the Palestinian economy, especially since most of the salaries of the Authority are in shekels as well as the income of Palestinian workers inside Israel, but this does not happen in the absence of price flexibility and non-decline, because traders "exploit" and fix the dollar exchange rate against NIS to increase profit.

Those affected by the dollar's decline are those who have liabilities in shekels while their incomes are in dollars.These are the private sector whose salaries are paid in dollars or Jordanian dinars.Although the percentage is not large (about 60 thousand employees) versus government employees (140 thousand), they are especially affected If their salaries are not fixed on the dollar exchange rate, "therefore no advantage benefits the citizen from the decline of the dollar."

Salameh expects the dollar to depreciate against the shekel in favor of the shekel's advantages, especially its foreign currency balance at the Central Bank of Israel, which exceeded 33% of Israel's GDP. The rise of the NIS is possible with lower interest rates on other currencies.

The dollar's decline coincides with the deteriorating economic situation of the Palestinian Authority, and employees received only half of their salaries for the seventh month in a row, and the cost of living index of Palestinians increased by 0.18% in July 2019 compared to June 2019.

Absence of currency
The Palestinian economy has been negatively or positively affected by the rise or fall of currencies.

The low salaries of employees working in international and local institutions, who are paid in dollars or Jordanian dinars, have increased their purchasing power and the value of their salaries when converted to shekel.

The Palestinians are affected - according to the talk of the island's natures Net - whose financial return is based on leasing their property in dollars or dinars, and those who save their money in foreign currencies, and the solution lies - according to the foul - the creation of a "temporary" Palestinian currency.