The shekel rallied significantly against major currencies on Thursday, but fell again in currency trading on Friday. The shekel’s representative rate against the US dollar rose 1.27% to NIS 3.6590 on Friday, while the shekel’s rate against the euro rose 1.01% to NIS 3.8752/ €. The dollar-shekel rate started 2023 at 3.53 NIS and the shekel-euro rate at just over 3.7 NIS/€.
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US bank Wells Fargo says the shekel is hurt by fears over Israeli government changes to the legal system, and that the currency’s weakness is at odds with strong economic fundamentals. Banks see the shekel strengthening to 3.4 NIS/$ by the end of the first quarter.
The reason for the shekel’s volatility is still not entirely clear. Among the explanations offered is that the Bank of Israel intervened in the market to prevent the shekel from weakening too much, but market sources completely rule this out. In a market review last week, Bank of America said the Bank of Israel could step in to moderate high volatility, but that would come at a price in the form of reduced liquidity in the market.
Published by Globes, Israel business news – en.globes.co.il – February 26, 2023.
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