The shekel has weakened by about 2% on the foreign exchange market since Prime Minister Benjamin Netanyahu’s declaration yesterday of his intention of moving forward with part of the government’s judicial overhaul plans this week.
Against the US dollar, the shekel has weakened by about 1.6% in comparison with Friday’s representative rate (the latest representative rate set) to around NIS 3.61/$. Against the euro, the shekel has weakened by about 1.3%, and is being traded at around NIS 3.94/€. The shekel has weakened by about 1.7% against the pound sterling.
"The exchange rate continues to be affected by the political uncertainty in Israel, by Israel’s risk premium, and the economy’s growth potential," Chen Herzog, chief economist of BDO Consulting Israel told "Globes", adding that "the weakening of the shekel reflects the market’s fears of the government advancing the legal reforms unilaterally."
United Mizrahi Tefahot Bank chief markets economist Ronen Menachem says that the political tension over the legal reforms is not the main reason for the weakness of the shekel. "It is not inconceivable that it reflects the tension between Israel and the US in the past few days," he says. Noting that, in its recent report, the IMF described the political risk as the main risk to Israel’s economy, Menachem said, "The current situation of sharp volatility in the foreign exchange market is the ‘new normal.’"
Published by Globes, Israel business news - en.globes.co.il - on June 19, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.