Israeli shekel hits lowest exchange rate value with dollar since 2017

The Israeli shekel (NIS) currency continued to lose ground against the U.S. dollar, reaching its lowest level since 2017 on Monday at an exchange rate of 3.8039 shekels to the dollar. 

Since the start of the previous week, the shekel devalued by 2 percent against the dollar, and has lost 5 percent of its value since the beginning of August.

The shekel also weakened against the euro, losing around 3 percent since the beginning of the month. At the end of last week, the exchange rate stood at 4.13 shekels to the euro. 

Faced with this currency depreciation, analysts at banks and investment firms expect the Bank of Israel to raise the interest rate by 0.25 percent on September 4, reaching a total of 5 percent. As a result, the prime interest rate is set to rise to 6.5 percent from its 1.6 percent in 2022. Some analysts speculated that the dollar could soon reach the four shekel mark, fueling fears that there would be further interest rate hikes.

Israel’s former finance minister, Avigdor Liberman, strongly criticized his successor Bezalel Smotrich and Israeli Prime Minister Benjamin Netanyahu for the fall in the national currency, saying that their speeches “cannot mask the fact that the dollar is hitting a five-year high of 3.8 shekels."

Analysts have attributed the shekel's weakness to concerns about the current political situation in Israel, surrounding the contentious judicial reform.