Just thirty days ago, the shekel was riding high. Now it's tumbling, and fast.
Sandrine Zimra © Mena Today
Just thirty days ago, the shekel was riding high. Now it's tumbling, and fast.
In May, the Israeli currency traded comfortably at NIS 2.8 to the dollar. Today it sits at NIS 3 — a dramatic enough swing to make the shekel one of the worst-performing currencies in the developed world this past month. The only currencies that have done worse? The Russian ruble and the Norwegian krone, both hostages to falling oil prices.
Geneva-based financial analyst Sandrine Zimra points to a confluence of factors driving the reversal: a broadly strengthening US dollar, a rising Israel risk premium following the US-Iran agreement, Bank of Israel intervention in currency markets, a Nasdaq slump, and widening interest rate gaps between Israel and the United States.
Adding fuel to the fire, Israeli financial institutions are reversing an eighteen-month trend in their foreign currency exposure, a shift that could accelerate the shekel's slide even further.
How Low Can It Go?
Bank of America projects the shekel-dollar rate could reach NIS 3.14 within three months, though the bank advises cutting losses if it falls back to NIS 2.9.
Before anyone treats these forecasts as gospel, a reality check: currency markets are notoriously difficult to predict. Just before Israel launched its bombing campaign against Iran in March, after which the shekel staged a rapid appreciation, Goldman Sachs was telling investors to sell shekels and buy dollars.
The lesson? In the foreign exchange market, today's confident prediction is tomorrow's cautionary tale. The shekel's recent slide may well continue, or it may reverse just as abruptly as it began.
A Lebanese official denied on Thursday a Reuters report that Beirut had agreed with Israel to a shortlist of countries that could send troops to Lebanon to verify the disarmament of Lebanese militant group Hezbollah, and said it was following up on the issue with Washington.
Israel won't withdraw from southern Lebanon until Hezbollah is disarmed, the defence minister said on Thursday, qualifying remarks he made a day earlier that had suggested Israeli forces would occupy the territory indefinitely and drew U.S. criticism.
Israeli troops clashed with Jewish settlers on Wednesday while trying to disperse them from a West Bank outpost they set up directly in front of Palestinian homes, and later withdrew from the area after failing to clear the settlers, witnesses said.
To make this website run properly and to improve your experience, we use cookies. For more detailed information, please check our Cookie Policy.
Necessary cookies enable core functionality. The website cannot function properly without these cookies, and can only be disabled by changing your browser preferences.
