The shekel has been again strengthening sharply today against the dollar and against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate is down 1.80% at 3.648/$ and the shekel-euro rate is down 1.47% at NIS 3.910/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate 0.535% down from Monday, at NIS 3.715/$, and the representative shekel-euro rate was set 0.589% lower at NIS 3.969/€.
IBI Investment House chief economist Rafi Gozlan says, “Since the end of January the main factor influencing the shekel has been developments around the judicial overhaul, and so too in the past few days.
“If after the budget was passed the shekel weakened sharply out of concern of renewed attempts to legislate on the judicial reform following a series of remarks by the prime minister and members of the coalition, then recent reports including comments from the director general of the Prime Minister’s Office and expectations for the appointment of an opposition representative to the committee for appointing judges have moderated those concerns, so that the depreciation of the shekel in the past two weeks has been fully wiped out.”
Gozlan adds, “However, it is important to mention that the situation is very fragile because the market’s level of trust in the government is not high so that if the belief develops that this is only a tactical retreat, and not genuine steps in the direction of a compromise and withdrawal from the original legislative intentions, the risk premium will rise again rapidly, including a rapid depreciation of the shekel.”
Prico Risk Management, Finance and Investments CEO Yossi Fraiman says, “Expectations of acceptable arrangements between the opposition and the coalition, together with selling foreign currency by exporters to pay salaries and taxes have created surplus foreign currency supply and is leading to appreciation of the shekel.”
Published by Globes, Israel business news – en.globes.co.il – on June 7, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.