Israel’s currency weakened as Prime Minister Benjamin Netanyahu said his government would push ahead with a contentious plan to reshape the judicial system and after fighting between Israeli forces and Palestinians in the West Bank.
The shekel slumped 1.4% to around 3.61 per dollar as of 4:45 p.m. in Tel Aviv, one of the worst performances in global currency markets on Monday. Israeli stocks rose to pare some of their losses on Sunday, which were partly caused by Netanyahu’s comments.
The prime minister said he would take “practical steps” this week “to implement our plan to repair the judicial system.”
Meanwhile, there were intense clashes between Israeli soldiers and Palestinians in Jenin on Monday morning. Five Palestinians, including a 15-year-old, were killed and more than 65 were injured, according to Palestinian officials. Israel said seven of its forces were hurt.
Israeli troops entered the city to arrest two suspects when they were targeted with explosive devices, Israel’s military and border police said. The soldiers opened fire and Israeli military helicopters shot at Palestinians from the air.
The developments add to tensions following what the United Nations says was among the deadliest years for Palestinians in the Israeli-occupied West Bank, land the Palestinians see as the core of a future state.
The US said it was “deeply troubled” by the Israeli government’s decision to advance planning for over 4,000 settlement units in the West Bank, according to a statement on Sunday.
Judicial Overhaul
The judicial initiative has prompted mass protests by critics who say it would reduce the independence of judges. It’s unnerved tech and other investors, with the shekel depreciating almost 7% since late January.
Netanyahu’s cabinet, widely seen as Israel’s most right-wing ever, says the courts have amassed too much power. The government is seeking to increase its role in selecting judges.
Opposition lawmakers halted negotiations last week after parliament — at Netanyahu’s bidding — elected only one, not two, of its representatives to a panel that makes crucial bench appointments.
Currency Outlook
Currency traders boosted wagers on further depreciation in the shekel on Monday. The extra cost to protect against shekel declines over the coming month — versus hedging against gains — rose to 1.7 percentage points from 1.5 at the end of last week.
Though concerns over higher US interest rates contributed to the currency’s weakness and it may soon stabilize, according to BNY Mellon.
“We believe the current risk environment has peaked for now,” said Geoffrey Yu, a currency and macro strategist at BNY Mellon in London. “We would not aggressively pursue shekel shorts from these levels.”
Author: Paul Wallace, Netty Ismail and Fadwa Hodali
