As Israel's political rift reopens and missile alerts become an almost daily recurrence amid resumed fighting in Gaza, the shekel is at its weakest for five months against the dollar, and the Tel Aviv Stock Exchange is falling very sharply today.
On Friday, the Bank of Israel set the representative rate of the shekel up 0.708% against the US dollar at NIS 3.697/$, and the shekel-euro rate was set 0.580% higher, at NIS 4.004/€. In futures trading the shekel has weakened a further 1.04% against the dollar at NIS 3.715/$ and the euro has weakened 0.84% at NIS 4.019/€. Since the start of the month the shekel has depreciated 2.7% against the dollar and is at its weakest for five months against the US currency.
Today, the Tel Aviv 35 Index is currently down 3.08% at 2425.86 poin3.35% at ts and the Tel Aviv 125 Index is down 3.35% at 2446.65 points.
The collapse of the ceasefire with Hamas and the return to intense fighting in Gaza has increased uncertainty in the Israeli market and led to a rise in Israel's risk premium. In addition, the government's announcement of the dismissal of Shin Bet chief Ronen Bar and the High Court of Justice's decision to freeze his dismissal have increased the level of political tension.
IBI Investment chief economist Rafi Gozlan tells "Globes," "The local market is undergoing an upheaval, from a ceasefire situation and perhaps on the path to normalization with Saudi Arabia, which Trump has pushed for, to a situation of a return to war and judicial overhaul. It should be taken into account that in addition, the global factor (the falls in the markets - etc.) is moving in the same direction and contributing to the currency's weakness."
Will the trend continue?
Gozlan feels it is more likely that the shekel will continue to weaken, "If we examine the behavior of the shekel-dollar rate over the past year, it has been trading for most of it in the NIS 3.60-3.80/$ range." He sees the current situation allows for a continuous weakening of the shekel, and that, "It is possible the current situation will pull the shekel toward the upper limit of this range," concludes Gozlan.
Published by Globes, Israel business news - en.globes.co.il - on March 23, 2025.
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