Dollar Surges Above 3.01 Shekels Amid Hormuz Strait Uncertainty and Market Volatility

The US dollar has risen again above 3.01 shekels, while the Tel Aviv Stock Exchange shows mixed trends. Market participants attribute the recent volatility to US employment data, profit-taking in technology stocks, and ongoing uncertainty regarding the reopening of the strategic Strait of Hormuz.

According to Ariel Feiglin, the recent weakening of the shekel does not yet alter the broader market outlook. He explained that without a final agreement ensuring free navigation through the Strait of Hormuz, a risk premium will persist, keeping the foreign exchange market volatile.

The backdrop also includes sell-offs in technology shares in the US and Asia. Investors remain cautious, weighing large investments in artificial intelligence infrastructure against companies’ ability to convert these into growth and profits. Feiglin noted that while the market still supports companies delivering results, it is increasingly selective toward those yet to prove returns on investment.

A significant development influencing markets is the report that Iran and Oman have reached an understanding on the shipping route through the Strait of Hormuz, with a joint statement in preparation. The emerging plan assigns Iran responsibility for inbound vessel traffic to the Gulf and Oman for outbound traffic. However, Feiglin emphasized this is not a final agreement for full and secure reopening. Key issues remain unresolved, including control over the route, transit conditions, the US stance, and restrictions on Iranian ports.

Oil exports from the Gulf in July were about 40% lower than pre-conflict levels, making a substantial resumption of tanker traffic crucial for reducing the risk premium. Any further delays in finalizing the arrangement could reignite volatility in oil prices, bond yields, and the dollar-shekel exchange rate.