Shekel at 2-month weakest against US dollar
The shekel weakened to a two-month low against the US dollar, with the Bank of Israel setting the representative rate at NIS 3.066/$, up 1.088%. The currency crossed the NIS 3.07/$ threshold in afternoon trading for the first time since July, driven by interest rate differentials, rising bond yields, Middle East tensions, and global dollar strength.
The shekel weakened to a two-month low against the US dollar on Monday, with the Bank of Israel setting the representative rate at NIS 3.066/$, up 1.088%. The currency crossed the NIS 3.07/$ threshold in afternoon inter-bank trading for the first time since July. Several forces are driving this trend: interest rate differentials vis-à-vis the US, rising bond yields, Middle East tensions, and the global strengthening of the dollar. The Federal Reserve raised interest rates to 4% this month, widening the interest rate gap between Israel and the US. Karni Family Office partner and hedge fund manager Dr. Ilan Gildin noted that the shekel's weakening reflects a combination of monetary and geopolitical factors, including continued Houthi attacks on Saudi Arabia and fears of an escalating conflict with Iran. Altshuler Shaham Financial Services founder and CEO Yossi Menashe observed that developments in the Middle East are spreading from the energy market to bond and currency markets, with oil up about 1.8% and the yield on the 10-year US Treasury note returning to the 5.21% range. The DXY index, measuring the dollar's value against major global currencies, reached a more-than-two-month high of 101 points. Gildin expects the exchange rate to remain volatile in the short term but estimates that Israel's current account surpluses and the Bank of Israel's substantial foreign currency reserves limit the potential for depreciation.