The shekel was sharply weaker against the dollar today. The Bank of Israel set the shekel-dollar representative rate up 2.237% this afternoon at NIS 3.474/$, and against the representative rate of the euro was set up 0.695% at NIS 3.739/€. In late afternoon inter-bank trading the shekel remains stable.
Analysts believe the shekel depreciation today was due to several factors. These include strong macroeconomic data published in the US on Friday about unemployment and new jobs created, which has strengthened the dollar on world markets. A second reason is jitteriness among domestic investors due to concern about the implications of the government's planned judicial reform for the Israeli economy.
Despite today's losses, the shekel still remains 2% stronger than the dollar since the start of 2023, and 3% stronger against the US currency than it was in early November, just after the Knesset elections.
IBI Investment House chief economist Rafi Gozlan told "Globes," "The dollar gains against the shekel are in relation to the representative rate on Friday and two major things have happened since then. The first is the job data in the US which was very positive and strengthened the currency in the world against the major currencies - a trend that has continued through to the beginning of this week."
Gozlan added, "There is also our domestic story in Israel focusing on the survey published by US investment bank J.P. Morgan on the Israeli market, in which concern was expressed that the reform of the judicial system promoted by the government, and the increase in security tensions seen in recent weeks, could have a negative effect on the growth of the economy and even lead to a cut in Israel's sovereign credit rating."
He stressed, "It seems that there is some kind of 'local contribution' to the strengthening of the dollar. It is not a story of 'net abroad' developments. In my estimation, the markets believe that the local risk premium is rising."
Published by Globes, Israel business news - en.globes.co.il - on February 6, 2023.
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