Shekel gains to near NIS 3.70/$ threshold

Shekel-dollar ASAP Creative
Shekel-dollar ASAP Creative

Despite the war, the shekel is trading at levels not seen since early August, due to a combination of domestic and global factors.

After stabilizing around NIS 3.75/$ earlier in the week, the shekel is again strengthening. In early afternoon inter-bank trading, the shekel-dollar rate is 0.56% lower at NIS 3.707/$, and the shekel-euro rate is 0.33% lower at NIS 4.058/€. The shekel has reached almost NIS 3.70/$ for the first time since early August.

Yesterday, the Bank of Israel set the representative shekel-dollar rate unchanged from Friday, at NIS 3.728/$, and the representative shekel-euro rate was set 0.586% higher at NIS 4.071/€.

Leader Capital Markets chief economist Yonatan Katz tells "Globes," that both domestic and global factors have combined to strengthen the shekel. "The continued strengthening of the shekel stems mainly from the rises taking place on the US stock market with a positive connection between rises on Wall Street and the strengthening of the Israeli currency."

"Domestic factors adding to the positive sentiment towards the currency, according to Katz is the latest news about the appointment of Bank of Israel Governor Prof. Amir Yaron for an additional term. "Foreign institutions have been asking many questions and taken an interest in the identity of the next governor. The uncertainty on the matter influenced the market but now there is confidence around the identity of the governor and being a known figure contributes to positive sentiment on the market."

Volatility is expected to continue

Bank Leumi head of markets strategy Kobby Levi tells "Globes" that the shekel will continue to be volatile in the short-term. "Uncertainty on the Israeli economy continues to be high, with the recent strengthening of the currency mainly due to external factors affecting the shekel, primarily rises on Wall Street." Levi explains that the shekel had been exceptionally weak this year due to the uncertainty in Israel, but global forces have contributed to and influenced the shekel's appreciation."

Swiss bank Lombard Odier says that as long as the security situation does not escalate, it has moved to a more positive position on the shekel. "Although we were negative about the shekel for much of the last year, our current position regarding it is now considered neutral. This change is based on the belief that it is likely that the conflict between Israel and Hamas will remain at the local level and will not develop to additional fronts," the bank said.

Outlook is positive, but uncertainty is high

Levi says, "The shekel still indicates weakness, and this can be seen against other foreign currencies, especially against the euro," But Levi also cites positive developments for the shekel. "Exports of the defense and high-tech industries has increased, and also in the previous quarter, the data showed an increase in Israel's exports."

Levi too thinks that as long as the war is focused on Gaza, and does not develop to other fronts, the shekel will strengthen in the long term, despite the volatility that is expected in the short term. "The export sector will continue to sell dollars, the institutions have stopped increasing their foreign exchange exposures and may return to selling dollars in the event of continued increases in global stocks, and the Bank of Israel is selling dollars, all of which support the increase. On the other hand, the risk in the short term still exists and investors see it. If an escalation occurs, it will lead to renewed depreciation," concludes Levi.

Katz says that the continuation of the war in the south makes it difficult to assess the future market, but "the background in the last few days is positive, with the prospect of a cease-fire and exchange of prisoners, this is as well as the fact that there has been no escalation in the north."

Katz adds that beyond the war, Israel's data show the economy in a positive state, "The growth data indicated positive growth and recovery of Israeli exports. In addition, the recently published Moody's report indicates a high probability that it will not lower Israel's credit rating if the war ends soon."

Published by Globes, Israel business news - - on November 21, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Shekel-dollar ASAP Creative
Shekel-dollar ASAP Creative
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