After the shekel strengthened sharply on reports earlier this week of a potential compromise between the government and opposition on the judicial overhaul plans, The Israeli currency is again weakening today. In afternoon inter-bank trading, the shekel-dollar rate is 0.64% higher at NIS 3.816/$, and the shekel-euro rate is 0.57% higher at NIS 4.094/€.
Mizrahi Tefahot chief markets economist Ronen Menachem told "Globes," that above and beyond the judicial overhaul, the strengthening of the dollar on world markets is also supported by the jump in oil prices. "This morning was saw the dollar hitting a new peak against the shekel at NIS 3.822/$.
"The weakening of the shekel is supported by two main factors: the first is the strengthening of the dollar against world currencies due to the spike in oil prices last night because of the announcement by Russia and Saudi Arabia that the cut in their oil output will continue until the end of the year. At the same time, other factors of uncertainty are strengthening the dollar, such as the slowdown in China, and tensions in the Korean Gulf. "At the same time, yesterday we were given a lesson in the connection between the political situation and the foreign exchange market when the shekel strengthened sharply after reports of a compromise on the judicial reform issue. At the same time, when it was reported that the chances of a compromise were still slim, the shekel weakened again."
Leader Capital Markets economist Yonatan Katz agrees with Menachem. He said, "The pressure to depreciate the shekel continues due to a combination of declines in the stock markets around the world (which forces institutions to purchase foreign exchange in order not to decrease the level of exposure to foreign exchange) and also a growing feeling that the chance of reaching a compromise in the field of the judicial reform is not high."
IBI Investment House chief economist Rafi Gozlan said of the new peak that the dollar has hit against the shekel. "The shekel continues its trend of weakening and this is supported both by the strengthening of the dollar globally and from domestic factors, chiefly the increasing reports that the Governor (of the Bank of Israel) will be replaced and the slight illusion of optimism that resulted from the news about the possibility of a compromise regarding the government's judicial plans prior to the High Court hearings.
Published by Globes, Israel business news - en.globes.co.il - on September 6, 2023.
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