The shekel has been again strengthening today against the dollar and against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate is down 0.83% at 3.704/$ and the shekel-euro rate is down 0.89% at NIS 3.957/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 0.267% from Friday, at NIS 3.735/$, and the representative shekel-euro rate was set 1.053% lower at NIS 3.992/€.
Mizrahi Tefahot chief economist Ronen Menachem told "Globes," "If the shekel is strengthening against the dollar when the dollar is strengthening in the world, then the story is probably local. Menachem explains that the shekel is gaining amid rumors of flexibility in the judicial reform talks at the President's Residence. "The judicial complexities are the factor feeding the forex market and so in the short term we see changes in the shekel exchange rate." Menachem adds that it is important to see that these steps towards compromise have substance otherwise, the strengthening of the shekel will only be temporary.
BDO chief economist Chen Herzog also thinks that there is a close connection between what is happening in the political field and the forex market. He told "Globes,"The volatility in the exchange rate reflects changing expectations for the risk premium of the Israeli economy and mainly risks surrounding the political controversy." In Herzog's opinion, it seems that recent assessments and statements indicating the coalition's flexibility on the issue of the committee for the selection of judges have reduced investors' concerns.
On the other hand, Prico Risk Management, Finance and Investments CEO Yossi Fraiman thinks that what is happening in the political arena is not connected to the forex market. "At the moment large bodies are paying salaries and so we see large conversions of currency." Prico expects the shekel to then continue depreciating.
Published by Globes, Israel business news - en.globes.co.il - on June 6, 2023.
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