The morning after the first reading of the law that will change the rules of the game in Israel, investors are voting with their feet as the shekel continues to weaken sharply against the dollar.
At this time the dollar jumps by 1% and reaches the level of NIS 3.6. As far as the Israeli shekel is concerned, this is a 3-year low against the American currency.
In the shadow of the concerns of the government’s steps in its way to turn the legal system upside down, the market fears the consequences of politicizing the legal system in Israel. Last night, the bill passed in first reading according to which the government will have a majority in the committee for selecting judges, and the High Court will not be able to rule on fundamental laws.
According to the conduct of the foreign exchange market, the confidence of investors in Israel is not going in a good direction. To this must be added the strange statement of Foreign Minister Eli Cohen who called for an end to interest rate increases, thus undermining the independence of the Bank of Israel. Cohen’s call was echoed in Bloomberg, but not from The government avoids accusing the protest of a spending “campaign” that will lead to the weakening of the shekel.
And in the meantime, the weakening of the shekel is expected to turn into inflation, and there is concern that the interest rate increase by the Bank of Israel yesterday will not be the last. The Bank of Israel chose to raise interest rates by 0.5% – the upper limit of the forecasts, and this against the background of the continued increase in inflation and the devaluation of the currency.