The shekel is falling against the US dollar today and is stable against the euro, at its lowest level against the dollar since April. In afternoon interbank trading, the shekel rose against the dollar by 0.37% to reach 3.767 shekels/dollar, and fell against the euro by 0.03% to reach 4.036/euros.
Yesterday, the Bank of Israel set the shekel-dollar exchange rate down 0.16% from Friday, at NIS 3.753 per dollar, and set the shekel-euro exchange rate up 0.358%, at NIS 4.035 per euro.
“The shekel weakened against the dollar last month for global reasons (the strengthening of the dollar in global markets), and for local reasons – an increase in the risk premium on the local economy, as reflected in the weakening of the shekel, the weak performance of the local stock market, an increase in yields in the local government bond market, an increase in the Israeli credit default swap premium and an increase in the spread between the yield on 10-year Israeli dollar bonds and the corresponding US Treasury bonds,” said Modi Shafrir, chief strategist at Bank Hapoalim.
Ronen Menachem, chief economist at Mizrahi Tefahot Bank, agrees: “The shekel’s depreciation is due to the dollar’s strengthening globally and its weakness domestically. This is also reflected in declines in the stock markets and even more so in the bond markets. Confusion and uncertainty characterize all areas in which the market operates – security, political and economic. There is no sign of improvement or any trend in any of them.”https://en.globes.co.il/en/
“In my opinion, the renewed talk of judicial reform also affects market sentiment to some extent. In such a situation, it is difficult for investors to make decisions, and the shekel tends to suffer because of this situation. The upcoming announcement of interest rates and the new economic forecasts of the Bank of Israel next Monday also affects the foreign exchange market, and therefore it is in a state of readiness.”
“At the same time, we must take into account that while the shekel weakened by 1.4% against the dollar over the past month, the euro also weakened against the dollar by a similar 1.2% due to political unrest in Europe (particularly in France). When you take this into account, and remember that the shekel actually reached levels of 4.08 shekels/dollar during the war and that the Bank of Israel is closely monitoring what is happening, it is not yet possible to detect any panic or worsening of the shekel’s recent weakening trend. We must be very careful about drawing conclusions based on one day, or several days, because the shekel reacts quickly and strongly to positive and negative developments, sometimes during the same trading day.”
This article was published in Globes, Israeli Business News – en.globes.co.il – on July 2, 2024.
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