Psagot: There is heightened uncertainty due to the Chief of Staff’s remarks on Iran and the approval of the budget, which puts the issue of judicial overhaul back on the table.
The shekel continues to depreciate at an alarming rate. In late morning interbank exchanges, the shekel-dollar rate was up 1.47% at 3.726/$ and the shekel-euro rate was up 1.52% at 4.018/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate at 0.575% from Monday at 3.672 NIS/$, and the shekel-euro representative rate increased by 0.129% to 3.958 NIS/€.
The shekel continued to weaken even after the government passed the 2023-2024 budget this morning. The shekel weakened yesterday after IDF Chief of Staff Lt. Gen. Herzi Halevi told the Herzliya conference there were negative developments in Iran that could trigger action of IDF.
Psagot’s chief economist, Ori Greenfeld, explains the shekel’s fall today as follows: “Increased uncertainty due to the chief of staff’s remarks and the approval of the budget, which brings the question of the judicial overhaul on the table. In the market, when uncertainty increases, this is reflected in the risk premium, as we now see in the shekel-dollar exchange rate. Once certainty returns, it is likely that the rate of The dollar-shekel exchange rate will also moderate. In the forex market, the name of the game is sentiment, and that’s what we’re seeing now.”
The shekel is currently at its weakest level against the US dollar since March 2020. Mizrahi Tefahot Bank’s chief market economist Ronen Menachem said that in the short term, the shekel’s performance depends a lot on political and security commentary. “That’s why we see such a jump in the exchange rate following the IDF Chief of Staff’s remarks.”
Published by Globes, Israel business news – en.globes.co.il – May 24, 2023.
© Copyright Globes Publisher Itonut (1983) Ltd., 2023.
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