BUSINESS US dollar instability adversely affects Palestinian economy amid coronavirus pandemic

BUSINESS

US dollar instability adversely affects Palestinian economy amid coronavirus pandemic

Xinhua

08:29, March 20, 2020

RAMALLAH, March 19 (Xinhua) -- The recent rise in the value of the U.S. dollar has adversely affected the Palestinian, especially after the outbreak of COVID-19, Palestinian analysts said.

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Photo: VCG

Palestinian economists told Xinhua in separate statements that the U.S. dollar rise comes because of the crash of the global financial markets as well as the plunge of the oil prices.

The instability of the global markets amid the spread of COVID-19 prompts investors to sell out stocks and prefer to hold cash, thus increasing the demand for the U.S. dollar, they said.

Nour Abu al-Rub, a West Bank-based economist, believed that the appreciation of the U.S. dollar would negatively affect all political, economic and social life in Palestine.

Palestine depends on foreign aid and receives money in U.S. dollar while all its banking transactions are in Israeli shekel, said Abu al-Rub, noting the value fluctuation of the two currencies will contribute significantly to the instability of the Palestinian economy.

The current situation threatens to weaken the purchasing power in the markets, and will further depress the Palestinian demands, he explained.

On March 5, the Palestinian Authority declared a state of emergency for one month right after the first COVID-19 case was discovered in the district of Bethlehem.

Palestine so far has recorded 47 cases of coronavirus, according to Ibrahim Melhem, the Palestinian government's spokesman.

Because of the emergency state in Palestine, the markets, factories, and all purchasing operations have stopped, Omar Shaban, an economist from the Gaza Strip, told Xinhua.

"All Palestinian merchants make their purchases in U.S. dollar, but they sell their goods in Israeli shekel, so they will have to raise prices significantly to avoid losses," Shaban said.

He predicted that the U.S. dollar would stay at a high rate in the near future until the control of the spread of the coronavirus in the world.

Palestinian markets in the West Bank and Gaza Strip have witnessed a remarkable increase in the prices of goods since the outbreak of the coronavirus, especially after the rise of the U.S. dollar against the Israeli shekel in the past few days.

"All customers will not buy anything (if the prices are too high) and I will lose," said Mohammed Youssef, a West Bank-based clothing merchant, told Xinhua.

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