The foreign exchange market is volatile again today. The shekel weakened significantly against the euro, as its price is currently up by 1.36% from yesterday’s representative price, at 3.9899 shekels/euro. Against the US dollar, the shekel weakened more moderately today. The price of the shekel against the dollar is currently up by 0.62%, at 3.6262 shekels.
Sharp fluctuations in the shekel’s exchange rates have become the norm in the past few months. Since the beginning of the year, the Israeli currency has fallen by 6% against the euro and by 3% against the US dollar.
“The shekel is very sensitive to developments in the legislation of the legal system,” says Rafi Gozlan, chief economist at IBI Investment House. “The statements that the legislation will proceed without consensus have led to an immediate increase in the risk premium, which quickly materializes in the foreign exchange market. A deterioration may have The security situation in the past few days also has an impact. The shekel has weakened this week even against the dollar, despite the dollar’s weakness in global markets. The weakness against the euro is more severe, reaching nearly 3% over the past week.”
Alex Zaczynski. Meitav Dash chief economist says, “The weakness of the shekel against the euro is the result of a combination of the strength of the euro against the dollar, with the price reaching more than $1.1 per euro (due to expectations that interest rate hikes in Europe) and the weakness of the shekel against the dollar for security and political reasons in Israel “.
CEO of BRICO Group Yossi Freeman-Adas, “The rate of the shekel against the euro is determined on the basis of a combination of the shekel rate against the dollar and the rate of the dollar against the euro. The legislation of the legal system causes exchange rates to fluctuate widely. As long as uncertainty prevails, the possibility of appreciation is limited. Moreover, the expectation of higher interest rates on the dollar following yesterday’s testimony of Federal Reserve Chairman Jerome Powell in Congress may cause volatility in the stock markets, which will lead to action by financial institutions, which will have to adjust their hedge portfolios by Buy dollars.
“The price of the shekel against the euro has returned to the level of 4 shekels / euro,” says Shy Datika, founder and CEO of the asset trading platform INX. A pincer movement reversed the weakness of the dollar against the euro and the strengthening of the dollar against the shekel and caused a sharp decline in the value of the European currency against the euro in the past week The weakness of the shekel affects importers from Europe and causes an increase in the prices of products imported from the continent.
“The strength of the euro against the dollar stems from the view that inflation in Europe is stronger and more stable than thought until May, which means a higher interest rate on the euro. In reverse movement and in contrast to the correlation in the past (the rise in the euro against the dollar is offset by the weakness of the dollar against The shekel), we are witnessing a 3% weakening of the shekel against the dollar. The shekel’s weakness stems entirely from the unilateral re-legislation of the legal system in the Knesset Constitution, Law and Judiciary Committee, without the unanimity that the prime minister promised to the credit rating agencies. The exchange rate of the shekel against the dollar and the euro has become a benchmark of the capital market and direct sentiments toward progress in legal system legislation.”
Published by Globes, Israel business news – en.globes.co.il – on June 22, 2023.
© Copyright Globes Publisher Itonut (1983) Ltd., 2023.