A weak yen turned Tokyo into a steal. A strong shekel turned Tel Aviv into the world’s most expensive city to buy McDonald’s

A McMeal costs the equivalent of $20.90 in Tel Aviv, the highest price on Earth, and $4.90 in Tokyo, once the world’s priciest city.  

A new Deutsche Bank report shows that the difference boils down to currency: a shekel strengthened by tech and defense spending, and a yen weakened by two decades of near-zero rates. 

Tel Aviv’s wartime boom

Just a decade ago, the Israeli city was a “mid-price Mediterranean city” and now sits among the world’s most expensive ones, according to Deutsche Bank’s report. Since 2012, Tel Aviv’s net salaries are up 137%, apartment prices up 136%, and even a dinner for two costs 122% more.

“Israel’s basket of goods, the consumer basket, has been very expensive,” Zvi Eckstein, a former Bank of Israel deputy governor and the head of the Aaron Economic Policy Institute, told Fortune.  

At the same time, the shekel gained roughly 30% against the dollar, including a 13% lift in the last year despite the war in Iran–one of the strongest moves of any currency in Deutsche Bank’s sample of 48 economies. The researchers credit Israel’s strong domestic tech and defense industries as well as supply disruptions for keeping the currency elevated. That resilience has deep roots—Fortune’s 2023 excerpt of “The Genius of Israel” traced the nation’s tech dominance back to compulsory military service, which doubles as a research and development pipeline. 

That boom hasn’t been a straight line. In late, 2023, Israel’s GDP contracted 20% as consumer........

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