Shekel at weakest for five months against dollar

• Published date: 18 April 2024
• Author: Aharon Katz
• Publication title: Globes (Rishon LeZion, Israel)

Yesterday, the Bank of Israel set the representative shekel-dollar rate up 0.133% from Tuesday, at NIS 3.775/$, and the representative shekel-euro rate was set 0.172% higher at NIS 4.015/€

Israel-Iran tensions and the strength of the dollar worldwide have the exchange rating touching NIS 3.80/$ for the first time since October 2023.

Mizrahi Tefahot Bank chief economist Ronen Menachem says that the shekel depreciation, "Reflects the continued tension and concerns ahead of Israeli retaliation against Iran and a further escalation in the north. These concerns are reflected in falls on the stock market, which were across the board yesterday and strengthened towards close of trade together with an accelerated depreciation of the shekel."

The exchange rate has been especially volatile since the end of last week when rumors of an Iranian attack against Israel began but according to Menachem the depreciation of the shekel stemmed from a different direction. He says that although reports of Iran preparing to attack Israel may have been a catalyst for the continued falls, he stresses, "Tensions and sensitivities are high in any case and the forex market usually reacts stronger and faster. This is also expressed in high intra-day volatility."

Bank Leumi head of markets strategy Kobby Levi tells "Globes," "Throughout Wednesday the shekel maintained stability around NIS 3.76-3.77/$ and NIS 4.00-4.02/€, but in the final two hours due to low liquidity and demand for foreign currency from foreigners, the shekel weakened even to NIS 3.80/$."

Levi pointed out that in recent days the credit spread of the State of Israel's bonds has expanded again, due to the geopolitical escalation, but the shekel- dollar exchange rate had difficulty breaking above the NIS 3.78/$ rate due to foreign exchange supply that was waiting for the rates. Levy added that: "In our estimation, the supply of foreign exchange waiting to be sold by local players will strengthen as the rates rise."

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