The shekel is continuing to gain today against the dollar and against the euro, after Prime Minister Benjamin Netanyahu last night suspended the judicial overhaul. In afternoon inter-bank trading, the shekel-dollar rate is down 0.66%, at NIS 3.534/$, and the shekel-euro rate is down 0.18%, at NIS 3.827/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate down 1.957% from Friday, at NIS 3.557/$, and the representative shekel-euro rate was set 2.062% lower at NIS 3.834/€.
The shekel is trading at its strongest for six weeks and after a period of volatility and upheaval, how is the Israeli currency expected to react in the coming weeks as the government and opposition strive for consensus on judicial reform?
US bank Wells Fargo is optimistic about the shekel and stresses that the Israeli economy has a long way to go to recover from the political crisis. Wells Fargo Securities emerging markets economist and FX strategist Brendan McKenna sees Israel's market treading water in the short term but adds that the calming down of the upheaval surrounding the judicial reform is a step in the right direction. He sees Israel bond yields falling and the shekel strengthening to NIS 3.45/$ in the coming months, depending on the political situation.
Mizrahi Tefahot Bank chief economist Ronen Menachem says the future depends on progress in dialogue over the reform. "The negotiations that will begin will have ups and downs and will be very volatile, so the level of concerns may be a source of greater volatility than usual in the market."
On the other hand, he explains, "If agreements are reached, this may be an important turning point and a good start to the second half of the year."
Published by Globes, Israel business news - en.globes.co.il - on March 28, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.