By Steven Scheer
JERUSALEM (Reuters) – The Israeli shekel fell 1.5 percent against the dollar on Wednesday, as rapid losses continued in the country’s judiciary reform plan, which could prompt Central bank intervenes.
Shekel is at 3.68, the lowest level since March2020 , after falling 1.6 percent on Tuesday.
Sheik since 10 touched 3.34 in January Israel fell nearly percent as local companies withdrew bank accounts from Israel and foreign investors stayed away from Israel over proposed judicial reforms.
The reforms would give the government more leverage in choosing judges while limiting the Supreme Court’s power to veto legislation. The new bill, which received preliminary approval from parliament on Wednesday, includes a bill banning the Supreme Court from interfering in ministerial appointments. On judicial reform,” said Jonathan Katz, chief economist at Leader Capital Markets.
He noted that FX intervention has the potential to “smooth out wild volatility,” but is not the central bank’s preferred tool Israel.
The central bank, which declined to comment, has purchased tens of billions of dollars over the past 10 years to prevent the shekel from devaluing too strongly Too soon, its reserves are at 125 billion.
“If this (shekel devaluation) continues at a rapid pace, we may see the Bank of Israel The rate hike to 5% is at the next interest rate decision (April 3), possibly earlier,” Katz said.
With Israel’s annual inflation exceeding 50 Hitting a yearly high of 5.4% in January, policymakers voted on Monday to raise the benchmark interest rate by 34 basis points to 4 basis points.25%, the eighth consecutive rate hike. However, the move was overshadowed by a judicial reform plan that passed a preliminary vote in parliament on Monday.
After the vote , Citigroup said it would be long the dollar shekel, targeting 3.125 against the dollar.
Critics say Prime Minister Benjamin Netanyahu Law reforms are being sought that would damage Israel’s democratic checks and
supporters say reforms are needed to rein in a radical judiciary they see as overly meddling in politics
Government bond prices fell 1.9%, while the main Tel Aviv 125 stock index fell 1.1%.