The value of the Israeli shekel is soaring against foreign currency following Israel’s victory over Iran and its (former) nuclear threat, with the essential assistance of the United States.
The shekel closed on Friday at NIS 3.398 against the US dollar, and at NIS 3.94 against the euro, its strongest rate since December 2022.
Since the start of the month the shekel strengthened by 3.6 percent against the euro, 5.4 percent against British Sterling and nearly five percent against the US dollar.
The shekel has strengthened by eight percent against the US dollar over the past year.
According to the Globes business news site, the newfound strength of the shekel is due to the fall in Israel’s risk premium following Operation Rising Lion, which severely degraded Iran’s ability to threaten the Jewish State.
Investor optimism has also been reflected at the Tel Aviv Stock Exchange (TASE); Bank Hapoalim chief financial markets strategist Modi Shafrir told Globes that Israel’s risk premium rose at the beginning of the war but quickly dropped with the improvement in the geopolitical situation, and the end of the conflict.
A strong shekel is an indication of a strong economy and could lead to a drop in the interest rate, albeit perhaps not immediately.
Shafrir added that the shekel is unlikely to fall below NIS 3.0 against the dollar. “In the long term, years ahead, I think so – but we are not close to there right now,” he said.
That is welcome news for those whose income is based in foreign currency and who are likely to take a financial beating with a drop in the value of foreign salaries or investments. Exporters and dual-currency companies are also likely to suffer – at least for now.
