The current market and economic focus has been on higher interest rates, higher inflation and the sell-off in stock and bonds. One thing that has been overlooked is the stronger dollar vs shekel, what it means for those who hold Israeli shekels, many of whom are expats or Americans living abroad.
Before we get started, we are financial advisors serving US expats, with a focus on Israel. We’ve written these blogs on expat finance that you may wish to read:
Dollar vs shekel 2022 – Nov 30th update
Since the start of 2022, the dollar has strengthened versus the Israeli shekel by just under 11% from just under to 3.11 to 3.43 as of today, November 30th, 2022. This is good news for people living Israel who earn in dollars, or rely on US social security payments.
In addition, the cost of living adjustment (COLA) for social security payments this year was 5.9%. So, for example, if you were receiving $1,000 monthly social security payments at the end of last year, this was 3,110 shekels. Now the adjusted sum of $1,059 will bring you 3,642 shekels, an increase of 17.2%.
COLA will increase an additional 8.7% in January 2023. Assuming the current exchange rate remains, the dollar social security payment will be $1,151, or 3,960 shekels, which is a 27% rise since just before 2021 year-end.
What a stronger dollar means for US expats
What is the significance of this for US expats world over and particularly here in Israel?
Most currencies have weakened versus the dollar. With local interest rates expected to rise, this may be an opportunity to use the extra dollars to reduce shekel liabilities, such as a car loan or mortgage.
For people looking to buy a home, one may consider that mortgage rates are going higher.
Houses in Israel are priced in shekels. Seeing that you are getting more shekels for your dollar now, you may consider taking advantage of the favorable dollar vs. shekel exchange rate and put more money down. In doing so, you will get more bang for your US buck and reduce the amount of your mortgage loan.
What might it mean for you?
We hope you have enjoyed our article on the dollar vs. shekel and what it may mean for US expats, particularly those living in Israel.
We are expat financial advisors located in Israel and the US, serving expats globally. If you are moving to Israel or another country and don’t know where to start when it comes to the financial side of things, please contact us.
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Norman H. Chait, CFA, Managing Principal, Nardis Advisors LLC, May 9th, 2022.
Disclaimer: Nardis Advisors LLC (“Nardis”) is a Registered Investment Advisory Firm regulated by the U.S Securities and Exchange Commission in accordance and compliance with applicable securities laws and regulations. Nardis does not render or offer to render personalized investment advice through this medium. The information provided herein is for informational purposes only and does not constitute financial, investment or legal advice. Investment advice can only be rendered after delivery of the Firm’s disclosure statement (Form ADV Part 2) and execution of an investment advisory agreement between the client and Nardis.