The shekel is strengthening today against the dollar and against the euro. In afternoon inter-bank trading, the shekel exchange rate is down 0.67% against the dollar at NIS 3.473/$ and down 0.15% against the euro at NIS 3.729/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 1.687% from Friday, at NIS 3.496/$, and the representative shekel-euro rate was set 0.021% lower at NIS 3.735/€.
The shekel has gained more than 2% against the dollar over the past two days, after weakening by 3% against the US currency in December. In part this is a reflection of the weakness of the dollar on international forex markets this week as US traders start pricing in a halt to Federal Reserve rate hikes following positive economic data on employment and wages.
At the same time the gains on Wall Street have also meant that Israeli institutional investors have been buying shekels and selling foreign currency to protect their positions on their overseas investments. The latest gains may ease concerns raised by some that the shekel has been weakening due to the right-wing policies of the new Israeli government.
Earlier this week, Meitav Dash chief economist Alex Zabezhinsky said, "The Israeli currency has had a high correlation over the past five years with the S&P 500 Index, but recently there has been a departure from the correlation. Together with other data, it could be that the reason is concern among foreign investors about the measures taken by the new government. But it is too early to tell where this is leading."
Published by Globes, Israel business news - en.globes.co.il - on January 10, 2023.
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