Weakened US Dollar Hits 2.7% Decrease in Value Against Israeli Shekel: 3.87

US dollar's value weakened further on Monday, marking a 2.7% decrease compared to the previous day. The representative exchange rate for the US dollar against the Israeli shekel closed at 3.87, while the Euro also experienced a 1.7% drop with its representative rate set at NIS 4.16.

The Israeli shekel, which had initially weakened at the onset of the Iron Swords War, saw the US dollar trading at approximately 4.08 shekels just 10 days ago. The Euro, on the other hand, strengthened against the US dollar but concurrently fell against the shekel, trading at around 4.20 shekels on Friday, after crossing the 4.3 mark a week earlier.

The US dollar's decline last week, including its performance against the shekel, was influenced by the Federal Reserve's decision to maintain the US interest rate at 5.5%, which was announced on Wednesday.

Market estimates this week suggest that the positive trend of the shekel may also be attributed to the Bank of Israel's sale of US dollars. The Bank had previously announced its plan, following the war's outbreak, to gradually infuse $30 billion into the foreign exchange market. However, until last week, it had struggled to curb the strengthening of foreign currencies against the shekel.

Yossi Freiman, CEO of Freeco Risk Management, Financing, and Investments, commented, "Forex offerings at the start of the month have supported the surplus supply and the weakening of the dollar. However, given the high uncertainty surrounding the war's consequences and the future of ground operations, the shekel's potential for further appreciation at this stage appears limited. In our view, over the medium term, the dollar may fluctuate within a broad exchange rate range of NIS 3.83 to NIS 4.12. The budget deficit and inflationary pressures, especially following the significant devaluation, are expected to pose challenges for the Treasury and the Bank of Israel, necessitating adjustments to the 2024 budget plan."