The shekel is weakening today amid uncertainty over how close President Isaac Herzog's compromise agreement on the government's planned judicial reform is to being achieved. In futures trading, the shekel-dollar rate is up 0.31%, at NIS 3.600/$, and the shekel-euro rate is up 0.53%, at NIS 3.838/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 2.047% from Friday, at NIS 3.589/$, and the representative shekel-euro rate was set 1.801% lower at NIS 3.817/€.
The optimism on the forex market over President Herzog's statement yesterday has dissipated somewhat today after conflicting statements by politicians. Opposition leader Yair Lapid implied that agreement is far away and while Knesset Constitution chairman MK Simcha Rothman and Minister of Justice Yair Levin have confirmed that a compromise is close at hand, they are at the same time pushing ahead with legislation of the government's judicial overhaul.
The shekel depreciated by 6% against the US dollar in February, and has been trading at its weakest level in three years, due to the political rift caused by the government's judicial overhaul plans, although the Israeli currency stabilized somewhat in the first few days of March.
Citi described the shekel as being under pressure from "local political noise" and predicted that the Israeli currency could depreciate as far as NIS 3.95/$. Bank of America analysts wrote. "Political noise in Israel doesn't usually impact Israeli assets or economic policy but we believe this time is different. Local sentiment has the potential to cause domestic investors to shift their portfolios away from shekel-based assets."
Published by Globes, Israel business news - en.globes.co.il - on March 7, 2023.
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