The shekel is weakening sharply today against the US dollar and the euro. In late afternoon inter-bank trading, the shekel-dollar rate is 1.26% higher at NIS 3.717/$ and the shekel-euro rate is 1.35% higher, at NIS 4.107/€.
Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.465% from Monday, at NIS 3.671/$, and the representative shekel-euro rate was set 0.223% higher at NIS 4.052/€.
RELATED ARTICLES
Smotrich’s 2025 budget plan: Tough measures to pay for war
Mizrahi Tefahot Bank chief economist Ronen Menachem says, “The shekel is sharply depreciating today against the dollar and against the euro. A significant reason is due to the sharp declines on Wall Street yesterday and the expectations that they will continue today. Such sharp declines cause a decrease in the exposure of local institutions to foreign currency, so they must convert shekels to foreign currency, which creates pressure on the shekel.”
“Furthermore, the political environment and the uncertainty regarding the hostage deal are of great importance. We know that the markets react positively when there are optimistic developments (the dollar is strengthening and the stock indices are rising), whereas in the current situation there seems to be no progress. It is also possible that the renewed talks about the judicial reform weaken the shekel. Last year, before the war, the reform was responsible for an excessive depreciation of about 10% in the shekel exchange rate.”
At the same time, one should not be excited by changes of several tenths of a percent on a daily basis, because the currency is very volatile. As evidence, over the last month the shekel actually strengthened by 2.4% against the dollar. Also, the new fiscal policy presented by the Minister of Finance, and restricting the deficit for 2025 to 4% of GDP, is apparently change moving towards the Bank of Israel and credit rating agencies. This factor may support the shekel and offset some of the effects overseas.”
“In my estimation, the wide range of the shekel will continue (NIS 3.60-3.80/$) depending on what will happen in the foreign markets and military and political developments. The shekel can change direction quickly and powerfully, so you should not get excited by daily and intraday fluctuations.”
Published by Globes, Israel business news – en.globes.co.il – on September 4, 2024.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2024.
