Trading on the Tel Aviv Stock Exchange opened with losses, and the main indices were down about 1.2% to 1.7%. In foreign exchange, the U.S. dollar continued to strengthen against the shekel and was trading at more than 2.99 shekels per dollar, putting it close again to the 3-shekel level.
Ronen Menachem, chief economist at Mizrahi Tefahot Bank, said the move reflects "a double story." He noted that over the past week the dollar gained 1.5% against the euro and 1.4% against the pound, but rose 2.7% against the shekel, a stronger move than against other major currencies.
According to Menachem, the dollar's advance stems partly from broader dollar strength, driven by rising expectations that U.S. interest rates will be raised by the end of the year. At the same time, the shekel is weakening against both the dollar and the euro because of concerns over the implications for Israel of the agreement between the United States and Iran.
He also pointed to falling U.S. stock markets as another factor that tends to pressure the shekel. Menachem added that the currency's current weakness comes after a very strong period, when the shekel had already touched 2.8 per dollar. He said the proximity to 3 shekels may cause traders to pause and reassess, but uncertainty is likely to remain high.
