The shekel has been weakening today against the dollar and against the euro. In afternoon inter-bank trading, the shekel-dollar exchange rate is up 0.54% at 3.720/$ and the shekel-euro rate is up 0.78% at NIS 4.082/€.
On the foreign exchange market yesterday, the Bank of Israel set the shekel-dollar 0.65% higher, at NIS 3.70/$, and the shekel-euro representative rate was set 0.38% higher, at NIS 4.0507/€.
Last week the shekel depreciated by 1.7% against the dollar.
Mizrahi Tefahot Bank chief economist Ronen Menachem told "Globes," "Nervousness in the market persists and as uncertainty surrounding the political situation in Israel continues, the unusual volatility will continue too."
Part of the recent weakening of the shekel is not only due to the volatility that characterizes the market these day but added pressure ahead of Fitch's credit rating decision regarding Israel, which should be published in the coming days, and a series of macroeconomic events in the world that are rattling the markets.
Yonatan Katz, chief strategist at Leader Capital Markets told "Globes," that the weakening shekel, "Stems mainly from the sharp fall in global stock markets and not domestic factors. Sharp declines in stock markets abroad contribute to the depreciation of the shekel by forcing local institutional bodies to purchase foreign exchange in order not to decrease their exposure to foreign exchange."
As for Fitch, the ratings agency published an up-to-date overview of Israel for investors in May. Fitch sees the debt-to-GDP ratio in Israel continuing to fall in the coming years despite the return to deficit budget management, and thanks to relatively strong growth. The ratings agency states that this trend may lead to an increase in Israel's rating, using a positive tone that we haven't heard from the rating agencies here in a long time.
However, immediately after praising the country's economic strength, Fitch qualifies the rosy forecast, mainly due to the fight over the judicial reform. "Israel continues to face high levels of internal social and political tension, and the promotion of certain policies favored by the coalition may worsen these tensions and affect the credit rating," the review stated.
Published by Globes, Israel business news - en.globes.co.il - on August 9, 2023.
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