USD-NIS Exchange to Strengthen, Wells Fargo Optimistic

As the political situation in Israel continues to evolve, the financial market is feeling the effects, particularly in the foreign exchange market. According to Brendan McKenna, emerging markets and foreign exchange strategist at Wells Fargo, the shekel has weakened by 1% against the dollar and other currencies since the start of the year. However, Wells Fargo is optimistic about the future of the shekel and predicts that it is likely to strengthen in the coming months.

The bank believes that the momentary relief in the legal reform crisis is a step in the right direction for the Israeli market. Despite the recent political turmoil, the shekel has reached a one and a half month high against the US dollar, trading at 3.54 shekels to one dollar, marking the seventh consecutive day of shekel appreciation against the dollar. This is the highest level since October 2021.

Wells Fargo predicts that the Israeli market will recover from the political crisis, but cautions that it still has a long way to go. The bank believes that the market will react more in accordance with global events in the short term and predicts that the shekel will not return to its peak levels in the near future. However, the bank is optimistic that after the Passover holiday and in light of the negotiation talks, more significant responses can be expected. If the legislative process continues to be delayed, the stock market in Israel is expected to rise and the risk premium is expected to drop significantly.

In conclusion, while the recent political events in Israel have had a noticeable impact on the financial market, particularly the foreign exchange market, Wells Fargo remains optimistic about the future of the shekel and predicts that it will strengthen in the coming months. The bank believes that the momentary relief in the legal reform crisis is a step in the right direction for the Israeli market and predicts a positive response in the near future.