Tel Aviv…The shekel is trading against the dollar at its weakest for three months. In fact, since the Bank of Israel announced on January 14 that it would be purchasing $30 billion in foreign currency in 2021, the shekel has depreciated 5.8% against the dollar. This is a dramatic change when many US importers had to pay higher prices for the significantly strengthened Shekel. Although importers say that the strengthened shekel did not result in higher retail prices, that may not have been the case if it was a long-term change. Israel’s leading bankers do not expect the Shekel to recover any time soon.
The Bank of Israel has continued to buy dollars on the market, although on a smaller scale compared to January, but the major reason for the weakening of the shekel in recent days was the fall in share prices on Wall Street. After the rises in recent months that bought the indices in New York to record highs in mid-February, there was the anticipated correction last week, because of rising US government bond yields.