Shekel sinks to weakest against dollar since 2016

The shekel has sunk to its weakest rate against the dollar since 2016. This afternoon the Bank of Israel set the representative shekel-dollar rate up 0.416% from Tuesday, at NIS 3.861/$, and the representative shekel-euro rate was set 0.364% higher at NIS 4.044/€. At one point in inter-bank trading the rate went above NIS 3.87/$, for the first time since November 2016.

The weaker shekel against the dollar reflects the strength of the US currency on global markets. The US Dollar Index (DXY), which measures the value of the US dollar relative to a basket of foreign currencies, has risen to 107 points, the highest since last November. Two main factors are behind the strength of the dollar – the strength of the US economy and US fiscal policy, which are creating growing demand for the US dollar

Bank Leumi head of markets strategy Kobby Levi told “Globes” that while weakening against the US currency, the shekel has been strengthening against most of the world’s other major currencies including the euro and sterling. “From a broader perspective, we can see that the shekel, despite the major harm done to the currency by the domestic events in Israel, has been one of the strongest currencies over the past week.”

On the other hand, Mizrahi Tefahot Bank chief economist Ronen Menachem said, “The shekel is still in circumstances that work against it, which includes, the issue of judicial reform and concerns about a constitutional crisis, security escalation and the political environment.” Although other currencies have weakened against the dollar recently, Menachem clarifies that at the heart of the story is the dollar and not the shekel.

From an optimistic perspective, Menachem points out that surprising events can change the picture, and for example “a political process vis-à-vis Saudi Arabia under US auspices, if and as it progresses, will work to strengthen the shekel against the dollar.”

Published by Globes, Israel business news – en.globes.co.il – on October 4, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.


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