As of this writing, the dollar-to-shekel exchange rate is around 1:3 – one of its lowest levels in decades. For private consumers, a weaker dollar may feel like an opportunity to order more from Amazon or shop abroad at attractive prices. But for companies that operate across both currencies, especially technology companies and startups, this is not just a macroeconomic headline. It is a variable that can directly affect day-to-day operations.
The exchange rate can affect a company in several ways. If a company raised capital in dollars while most of its expenses are in shekels, the recent decline in the dollar means its runway is getting shorter, sometimes without management noticing in time. As the dollar falls, the company’s financial breathing room shrinks. Without closely monitoring the trend and understanding its implications, the company may find itself running out of budget months before its next planned funding round.
The same issue appears in another common structure: Israeli companies that pay salaries in shekels while selling abroad in dollars. Here too, a weaker dollar can be painful. Revenues that were expected to produce a certain shekel value suddenly fall short, affecting expected income, hiring plans, expansion decisions, tax calculations, and more.
But a low dollar exchange rate does not only create risks. Dollar-denominated expenses become cheaper for a company whose main capital is in shekels. For example, many digital advertising platforms charge in dollars. A lower dollar may allow the same marketing budget to generate more exposure than originally planned, reach more potential customers, and support broader activity.
From Data to Decisions: Where Real Financial Thinking Comes In
Even when the dollar is unusually low, it is important to remember that the foreign exchange market is always moving. The problem begins when a company does not recognize the possibility of volatility, or has no clear plan for handling it from both a risk management and opportunity standpoint.
This is where we at Danoy come in, as an external finance department and a true financial partner for the organization. As a company that provides financial guidance to dozens of technology companies, we stay alert to foreign exchange market fluctuations and help our clients prepare accordingly.
We build data-based assessments of how changes in the dollar exchange rate may affect our clients’ operations, runway, obligations, and future plans. Based on these assessments, we may recommend specific actions to management, suggest hedging mechanisms designed to preserve the value of the company’s cash reserves, and help structure financial conduct with suppliers and customers so the company does not carry unnecessary exchange rate risk.
Ultimately, foreign exchange is part of the financial ecosystem in which almost every technology organization operates. We treat it as an influential and volatile factor, create solutions that strengthen our clients’ control over their finances, and help them identify currency-related risks and opportunities. These actions can save significant amounts of money.
If you are dealing with foreign exchange-related issues, we invite you to speak with us so we can help you build tailored solutions.