The spectacular appreciation of the shekel in opposition to the US greenback this 12 months, by about 10%, has occasioned substantial losses for Israelis invested in US belongings. The DXY greenback index, which measures the worth of the US greenback in opposition to a basket of main currencies, has additionally fallen by 10% up to now this 12 months. In opposition to this background, there are those that are questioning whether or not that is maybe the time to extend publicity to the greenback. Many of the market specialists say that it isn’t.
“The sharp fall within the worth of the greenback in opposition to the shekel stems primarily from the depreciation of the greenback on world markets,” says Financial institution Leumi strategist Kobby Levi. “Israeli traders who purchased euro-denominated bonds, for instance, have been hit lower than these uncovered to the greenback.
“Our expectation is that the geopolitical enchancment (in Israel), which is already manifest in enchancment in pricing in giant components of the capital market, such because the native inventory and bond markets, will even have an effect on the shekel and can assist appreciation in opposition to the basket of currencies.” In different phrases, in Levi’s view, the shekel might proceed to strengthen. For that motive, he says, “There’s no room for lowering foreign money hedges regardless of the low charges.”
Meitav chief economist Alex Zabezhinsky additionally commented earlier this week on the power of the shekel and its penalties for the general public’s asset portfolio. “The appreciation of the shekel might go a good distance,” he wrote, including that the explanation for that was that the general public in Israel was more likely to promote extra overseas currency-denominated belongings, to the tune of billions of shekels. On the idea of the information he gathered, he says, “The burden of foreign-currency-linked belongings (not together with abroad shares) within the public’s asset portfolio was about 15% in March. That’s nonetheless 2% larger than the steady ranges that prevailed till the tip of 2022. To return to the burden at the moment, the general public (together with monetary establishments) might want to promote overseas foreign money to the tune of over NIS 100 billion.”
Zabezhinsky additionally factors to the hyperlink between the shekel-dollar change charge and the efficiency of the S&P 500 Index within the US. When the index rises, the change charge falls, i.e., the shekel strengthens. In his view, there may be nonetheless room for the shekel to strengthen, to ranges of NIS 3/$ and even decrease.
Modi Shafrir, chief monetary markets strategist at Financial institution Hapoalim, additionally recommends lowering the overseas currency-denominated part of the portfolio, estimating that the shekel will proceed to strengthen. That is for 2 fundamental causes: “The primary is that the essential forces supporting a robust shekel are anticipated to strengthen within the coming years, comparable to Israel’s giant steadiness of funds surplus. The second is that, for my part, monetary establishments will shortly begin to cut back their foreign money publicity (due to the change of cash from funding within the S&P 500 to the Tel Aviv Inventory Alternate to enhance returns, H.S.).
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Rami Dror, CEO of Worth Superior Investments Group, provides, “The shekel-dollar charge is now consolidating at previous/new ranges of round NIS 3.5/$. What saved it excessive prior to now eighteen months was mainly the regional security-geopolitical state of affairs. Following the adjustments which have taken place within the area, it’s now at a brand new equilibrium degree, and in my opinion we will proceed to see the shekel-dollar charge on this space.”
Revealed by Globes, Israel enterprise information – en.globes.co.il – on July 8, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
