The shekel has been strengthening sharply today against the dollar and against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate is down 1.29% at 3.661/$ and the shekel-euro rate is down 1.15% at NIS 4.036/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate 0.027% down from Monday, at NIS 3.709/$, and the representative shekel-euro rate was set 0.453% higher at NIS 4.083/€.
Despite yesterday's disruptive mass protests against the government's judicial overhaul after the Knesset passed the first reading the bill to remove the court's ability to nullify a decision by an elected official or by the government on the grounds that it is unreasonable in the extreme, the markets have stayed calm. The TASE is currently rising for the third straight day and the shekel is appreciating.
Psagot Mutual Funds VP Investment Boaz Ravid said, "After the bill for curbing use of judicial review passed its first reading, certainty has prevailed. The market has learned from experience and is always looking ahead. Investors believe that some sort of compromise will probably be reached or softening of the legislation before the legislation is completed."
IBI Investment House chief economist Rafi Gozlan added that he believes the current calm is because the market has seen previous cases where laws have been passed on their first reading but ultimately not enacted. "You have to see the passing of the law on reducing unreasonability in its first reading as a tactic for negotiations. If the government continues to push the bill through, we will see a rise recorded in Israel's premium risk and a sharp change in the currency exchange rate."
Published by Globes, Israel business news - en.globes.co.il - on July 12, 2023.
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