The shekel again weakened today against the dollar and against the euro. The Bank of Israel set the representative shekel-dollar rate up 0.809% from Monday, at NIS 3.615/$, and the representative shekel-euro rate was set 0.964% higher at NIS 3.932/€.
Yesterday, the Bank of Israel set the shekel-dollar representative rate 0.56% higher from Wednesday, at NIS 3.5860/$, and the shekel-euro representative rate was set 0.75% higher, at NIS 3.8962/€.
The shekel has weakened by 2.4% against the dollar in the first quarter of 2023.
The shekel is weakening even though Wall Street indices have been on the rise. Usually the opposite happens with the shekel strengthening as Wall Street rises as Israel’s large investment institutions hedge their overseas investments by selling dollars.
This correlation has been broken in recent weeks as Israeli institutional investors have been more focused on the domestic political dramas than the US markets. Senior economists have told “Globes” that although many had expected the markets to become less volatile after Prime Minister Benjamin Netanyahu paused the judicial overhaul, the domestic political situation is still uncertain and the political crisis is far from over so there are still serious concerns about the local market.
Mizrahi Tefahot Bank chief economist Ronen Menachem says, “The market today is very volatile and so not every rise in the US results in a rise in Israel and in the past few days move between NIS 3.55/$ and NIS 3.66/$.”
Menachem explains that institutional investors won’t be making a substantial change in their investment portfolio to balance slight volatility in the market. Another reason for the situation, Menachem says, is that the domestic situation is much more significant at the moment than the US situation. “We are still hearing about the continuing political crisis and discussions and negotiations between the sides. Don’t forget that the budget has not yet been approved in its second and third readings – in other words Israel’s fiscal policy is still unclear.” Because of all this, Menachem stresses, it is very logical that the complex situation in Israel is more influential.
Published by Globes, Israel business news – en.globes.co.il – on March 31, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.
