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Against the background of the legal reform: The US investment house expects the shekel to continue weakening against the dollar | Israel Hayom

2023-05-29T15:21:10.765Z

Highlights: Goldman Sachs changes forecasts for the shekel-dollar exchange rate. "With limited monetary policy, we believe that the main driver will be domestic politics," Goldman's strategists, including Kamashya Trivady, said in the report. The shekel plunged 2.3% last week after the Knesset passed a state budget for 23-24, which includes increasing funding for Haredi institutions that do not teach core curriculum. At the beginning of the year, the US investment house warned that the weakness of theShekel may continue in the short term.


Goldman Sachs changes forecasts for the shekel-dollar exchange rate: "With limited monetary policy, we believe that the main driver of the shekel-dollar exchange rate will be domestic politics"


Goldman Sachs strategists lowered their forecast for the shekel against the dollar amid renewed concerns that the legal reform will increase pressure on the currency and the central bank will not intervene in the foreign exchange market, Bloomberg reported today.

The bank's economists wrote that comments by central bank deputy governor Andrew Abir last week that interest rates should be the main tightening tool reduced "the potential for intervention in the foreign exchange market."

Levin and Netanyahu on the night of the vote on the budget laws, photo: Jonathan Zindel, Flash 90

"If domestic investors and investors in the technology market continue to be more concerned about domestic political developments and their impact on institutional quality, the risk premium may be further reflected in the exchange rate."

The shekel plunged 2.3% last week after the Knesset passed a state budget for 23-24, which includes increasing funding for Haredi institutions that do not teach core curriculum.

Goldman revised its forecasts for the shekel to 3.70 and 3.60 against the dollar over the next three and 12 months, respectively, from 3.50 and 3.40 previously. Although this is not far from the current level at which the shekel is traded, strategists said they expect volatility around their assessments to "remain high."

With limited monetary policy, we believe that the main driver of the shekel-dollar exchange rate will be domestic politics," Goldman's strategists, including Kamashya Trivady, said in the report.

At the beginning of the year, the US investment house warned that the weakness of the shekel may continue in the short term amid concerns about the reform.

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Source: israelhayom

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