The shekel has fallen to its lowest level since 2016 compared to the dollar. The representative shekel-dollar rate was established by the Bank of Israel this afternoon at NIS 3.861/$, up 0.416% from Tuesday. The representative shekel-euro rate was set at NIS 4.044/€, up 0.364% from Tuesday. For the first time since November 2016, the rate briefly surpassed NIS 3.87/$ during interbank trading.
Shekel’s decline in value relative to the dollar is a reflection of the US dollar’s strength on international markets. The value of the US dollar in relation to a basket of international currencies is gauged by the US Dollar Index (DXY), which has increased to 107 points, the highest level since last November.
The US economy’s health and the US government’s fiscal policy, both of which are driving up demand for the US dollar, are the two key drivers behind the dollar’s rise.
While the shekel has been declining against the US dollar, Kobby Levi, head of markets strategy at Bank Leumi, told “Globes” that it has been strengthening against the majority of the other major currencies in the world, such as the euro and pound.
“From a broader perspective, we can see that the shekel, despite the major harm done to the currency by the domestic events in Israel, has been one of the strongest currencies over the past week.”
On the other hand, Mizrahi Tefahot Bank chief economist Ronen Menachem said, “The shekel is still in circumstances that work against it, which includes, the issue of judicial reform and concerns about a constitutional crisis, security escalation and the political environment.” Although other currencies have weakened against the dollar recently, Menachem clarifies that at the heart of the story is the dollar and not the shekel.
In a more upbeat vein, Menachem notes that unexpected occurrences can alter the situation, and that, for instance, “a political process vis-à-vis Saudi Arabia under US auspices, if and as it progresses, will work to strengthen the shekel against the dollar.”