Israeli Shekel Strengthens on Election Day, Dollar Nears 3 NIS
Translated & summarized from Ynet by baba
The Israeli shekel strengthened significantly on election day, with the dollar falling to around 3.02 NIS, its lowest in a month. This currency movement could moderate an expected rise in fuel prices. Market analysts believe a stable coalition government will impact the shekel more than the election winner. Key central bank interest rate decisions are also expected this week.
The story in 5 lines · by baba
- The Israeli shekel strengthened on election day, pushing the dollar to its lowest level in a month.
- The dollar's weakening may moderate an anticipated significant increase in fuel prices.
- Market analysts believe a stable coalition government is more crucial for the shekel than the election winner.
- Investment bank J.P. Morgan predicts election results could move the shekel by up to 3%.
- Central banks in the US, Europe, and Japan will announce interest rate decisions this week.
The Israeli shekel continued its strengthening trend on election day, building on gains from the previous day. The dollar weakened by approximately 2%, trading around 3.02 shekels, its lowest level in about a month. The euro saw a steeper decline, trading near 3.37 shekels. Cumulatively, the dollar has lost about 3% since Friday, when its representative rate stood at 3.11 shekels. The euro weakened even more during the same period, falling from 3.48 shekels. This erases a significant portion of the dollar's gains from the past month within just two days.
The dollar's exchange rate is expected to significantly impact fuel prices, which are set to be announced on Thursday. Previously, a substantial price hike was anticipated, potentially bringing the cost of a liter of 95-octane gasoline close to 9 shekels. This was due to rising oil prices and an expiring order that mandated a 1 shekel discount on fuel excise tax. However, the recent depreciation of the dollar may moderate this increase if the situation persists until Thursday. Furthermore, if Finance Minister Bezalel Smotrich extends the excise tax order, fuel prices might not rise at all.
Market analysts suggest that the outcome of the election will have less impact on the shekel than the formation of a stable coalition capable of passing a budget. A clear electoral result that reduces uncertainty could bolster the shekel, while prolonged coalition negotiations or repeat elections might weaken it. Investment bank J.P. Morgan estimates that election results could affect the shekel's exchange rate by up to 3%.
Several key events are anticipated in the foreign exchange market this week. The US Federal Reserve, the European Central Bank, and the Bank of Japan are scheduled to announce their interest rate decisions on Wednesday, Thursday, and Friday, respectively.
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