© Reuters An American investment house warns: the legal reform could lead to a depreciation of the shekel
| Sonia Gorodisky, Israel Today |
Concerns in the capital market about the consequences of the legal reform are increasing and there are already quite a few estimates that the shekel may continue to weaken in the short term, which may accelerate Israel. Economists at Goldman Sachs (NYSE: ), the American investment house, warned over the weekend that weakness could continue in the short term in the shadow of concerns over legal reform by Levin’s opponent.
Under the heading “Shekel – an unusual deviation from the correlation with the global technology market” the bank’s economists write:
“Recently, the legal reform proposed by the Netanyahu government raised concerns among some investors, including local ones, that the reform could reduce judicial independence in Israel and lead to a reduction in investment and high-tech growth in Israel. The shekel may be subject to domestic policy risks more than in recent years. In line with these concerns, a dollar The shekel is in a noticeable deviation this week from the correlation that characterized it against global technology indices.”
We note that the shekel has weakened against the dollar since last Wednesday by nearly 2.5%, against the background of the governor’s warnings about the possible consequences of downgrading Israel’s credit rating, as well as warnings from hundreds of senior economists that the government’s legal revolution could seriously damage the economy. An index has fallen since Wednesday by about 3%, while an index actually rose by a similar rate.
Goldman Sachs economists concluded and wrote:
“While the recent increase in political uncertainty is worrisome and could continue to be reflected in further weakness of the shekel in the short term. It will take time for the basic correlation created between the dollar/shekel and global technology stocks to erode.”
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