Shekel soars, anticipating Netanyahu pausing reforms

Shekel credit: Shutterstock Vladirina 32
Shekel credit: Shutterstock Vladirina 32

The Tel Aviv Stock Exchange (TASE) is also up sharply today on the assumption that Netanyahu will pause the judicial overhaul and thus end the general strike.

Despite the general strike, the shekel is strengthening sharply today against the dollar and against the euro, in anticipation of Prime Minister Benjamin Netanyahu pausing the judicial overhaul. In afternoon inter-bank trading, the shekel-dollar rate is down 2.22%, at NIS 3.547/$, and the shekel-euro rate is down 2.47%, at NIS 3.818/€.

On Friday, the Bank of Israel set the representative shekel-dollar rate up 0.443% at NIS 3.628/$, and the representative shekel-euro rate was set 0.359% lower at NIS 3.914/€.

The Tel Aviv Stock Exchange (TASE) is also up sharply today on the assumption that Netanyahu will pause the judicial overhaul and thus end the general strike. The Tel Aviv 35 Index is up 2.05% at 1776.58 points. However, threats by Minister of National Security Itamar Ben-Gvir that he will leave the government if the legislation is paused have delayed any announcement so far by Netanyahu.

IBI Investment House chief economist Rafi Gozlan told "Globes," that the market reflects the prevailing spirit in the country. He says, "The market has no political position but reflects the economic consequences of what is being done in the political world, and sees an expectation of halting the legislation that has caused instability in the economy and therefore we see the indices rising and the shekel strengthening in the world."

Gozlan adds that Israel's risk premium has also fallen following the forecasts in the market. He stresses that despite the rises in the market, the situation is still fluid and the more the political crisis tilts one way or the other, the more we will see the economy react accordingly and immediately. He says, "The strikes in the economy, even though they are not supposed to be encouraging economically, are seen as a step to encourage halting the legislation and therefore we see a situation of increases in the stock market indices even though the Israeli economy itself has come to a halt."

Mizrahi Tefahot Bank chief economist Ronen Menachem says that tensions surrounding the question of whether the judicial overhaul will continue has a potential negative effect on the sentiment on the stock exchange and foreign exchange markets, but the reports that Netanyahu has decided to stop the legislation temporarily calms the market. "Anyway, the very high volatility in the shekel exchange rate will continue, at least soon," he says. Looking ahead he stresses that the correlation between the events in the political arena and the shekel exchange rate is sharpening.

Published by Globes, Israel business news - en.globes.co.il - on March 27, 2023.

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

Shekel credit: Shutterstock Vladirina 32
Shekel credit: Shutterstock Vladirina 32
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