đ Strong shekel crushes tech margins - dollar at âȘ3.08. Budget passes 62-55. âȘ207B in wartime debt. Apple's mega acquisition of Q.
This is your TV10 Weekly Edition, curated from the Hebrew coverage on Israel's only business and finance channel.
Editorâs note:
Since World War II, the U.S. Treasury maintained a strong dollar while the Fed fought inflation. Now, the White House is openly pushing dollar depreciation to boost manufacturing. This created a standoff - Trump seemed to be weaponizing currency volatility to force Fed Chair Powell to cut rates from 3.75%. Powell refused, stating exchange rates are âthe province of the Treasury.â
While a strong shekel sounds like a positive headline, beware of fallout for Israel. Our tech sector earns in dollars but pays costs in shekels. The dollarâs collapse to âȘ3.08 is crushing export margins while The Bank of Israel is in a sub-optimal positionâ intervening risks political retaliation from a volatile Washington, while inaction allows the currency shock to hollow out our primary growth engines.
â Sophia Tupolev, TV10 Global Editor
TASE weekly snapshot
The Tel Aviv Stock Exchange closed the week mixed.
TA-35 Index (TASE:TA35): đą +0.43%
TA-90 (TASE:TA90): đŽ -3.02%
TA-125 (TASE:TA125): đŽ -0.34%
Macro & FX
The dollar hit a four-year low of âȘ3.087 while the euro rose to âȘ3.707. Trump insists the dollar is âdoing greatâ but his administration openly wants a weaker currency to compete with China and Japan. Bloombergâs Dollar Index fell 1.2% in a single session.
The Swiss Franc surged to a decade high, up 3.5% year-to-date against the dollar, as investors fled to safety. Gold breached $5,200/oz. Swiss National Bank Chairman Martin Schlegel warned at Davos that rapid appreciation creates disinflationary pressure - while Swiss inflation is already 0.1%.
As the West frets over exchange rate spreads, we watch Tehran fight for economic survival, and not only. Iranâs Rial collapsed past 1,500,000 to the dollar on the black market, driven by sanctions, US military threats, and a total evaporation of public trust - to say the least. Concurrently, German intelligence reports a spike in Iranian cyber-terror activity, a tell-tale sign of a regime under immense internal strain - a wounded animal.
Our take: We are watching the Triffin Dilemma play out in real-time - international demands vs. domestic monetary policy. The global economy craves dollars for liquidity but is losing faith in the currency's long-term value as deficits mount. For Israeli CFOs, the hedging playbooks of 2025 are dead. In this environment, routine cash flow management has effectively morphed into high-stakes FX speculation. And for the Ayatollahs, the danger is existential; historically, hyperinflation is the most efficient engine for regime change.
Analysis | Israeli tech faces margin squeeze from strong shekel
The dollarâs collapse to âȘ3.08 transfers wealth from Israelâs exporters (tech and defense) to its consumption base - importers and households.
For companies like Elbit Systems (NASDAQ:ESLT) or Aryt (TASE:ARYT), the math is brutal. They bill clients in depreciating dollars but pay salaries and taxes in strengthening shekels. The exchange rate has slashed top-line revenue ~10% year-over-year while local costs remain sticky. We could see âefficiencyâ layoffs in Q2 driven by FX-induced margin compression, not demand weakness.
For households, the strong shekel deflates imports - meaning, cheaper energy, cars, and consumer goods. This gives BoI Governor Amir Yaron room to cut rates without triggering inflation.
Here lies the trap. If the Bank of Israel cuts rates aggressively to save the exporters, capital flows out, weakening the shekel (good for tech). But doing so widens the âyield spreadâ with the US Fed (currently at 3.75%), potentially triggering a chaotic capital flight rather than a controlled depreciation. Governor Yaron is walking a tightrope. He must devalue the shekel enough to protect the Israeli economy, but not so much that he triggers a bond market rout.
Israeli 2026 budget passes 62-55, but real battle moves to committees
The Knesset approved the âȘ662B state budget last week, but the Arrangements Law, containing structural reforms like the 15% bank excess profit tax, now faces committee warfare.
Finance Minister Smotrich is routing critical bills to friendly committees to bypass Economic Affairs Committee Chair MK David Bitan. Smotrich also publicly demanded Governor Yaron cut rates âby 1% or more, immediately.â
Our take - this is fiscal dominance, forcing the central bank to subordinate inflation control to government debt-service needs. The Bank of Israelâs icy response (âNot worthy of a comment,â) signals that Governor Yaron understands the game.
While the political echelon calls for easy money, the Accountant Generalâs data provides a sobering reality check. The Debt-to-GDP ratio climbed to 68.6% in 2025 (from 67.7%), driven by âȘ207B in wartime debt. With a 3.9% deficit target for 2026, fiscal space is gone. The government canât spook bond markets but needs spending for political survival.
Apple acquires Israeli audio-AI startup Q
While the headlines remain fixated on currency volatility and the friction of the budget debates, the underlying capital flows are telling a far more resilient story.
This week, Apple (NASDAQ:AAPL) announced the acquisition of Israeli startup Q, an audio-AI pioneer. Appleâs Senior VP Johny Srouji explicitly highlighted the teamâs âexceptionalâ capabilities, marking a second home run for founder Aviad Maizels (who sold PrimeSense to Apple in 2013).
This corporate vote of confidence tracks with the sovereign data. According to the Accountant General, despite the geopolitical firestorm of the last year, Israel successfully raised over half a trillion shekels in debt. Crucially, this issuance was met with robust demand from global investors, not just local institutions.
Whether it is a tech giant securing talent in Herzliya or a global fund buying bonds in Jerusalem, smart money is effectively looking past the immediate deficit. They are taking a long position on Israelâs fundamental assets, technology and infrastructure. The prevailing thesis - once the geopolitical risk premium eventually evaporates, the economyâs true âterminal valueâ will be undeniable.
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The English TV10 newsletter is edited by Sophia Tupolev. We love to hear from you.
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Disclaimer: This brief is for informational purposes only and does not constitute investment advice. All data is current as of publication date.