Disclaimer: This post is made only as an analysis of this currency pair, with no intent to express any opinion or commentary on the ongoing conflict.
The Israeli Shekel has been the strongest performing currency in the world so far in 2024, even gaining against the US Dollar.
And this is happening even as Israel is a country facing enormous uncertainty and challenges on multiple fronts.
Prior to the Hamas attacks on October 7, 2023, there was already political turmoil around Netanyahu's judicial reform. He faced accusations of corruption that divided the country and hampered functions of government. Protests filled the streets. There was repeated gridlock in electing a government, and there were negative social and economic impacts. Rightfully so, the Israeli Shekel was in a prolonged downtrend against the US Dollar for years.
Since the attacks, Israel has entered a brutal war with enormous costs to civilian life, as well as Israel's global reputation, security and economy.
So why has the Shekel rebounded so quickly after the attacks, broken out of a multi-year downtrend, and actually been the strongest performing currency in 2024 so far?
Two reasons: 1) The Bank of Israel has stated an intention to maintain higher interest rates, while the US Federal Reserve has indicated an intention to lower rates in 2024. 2) Israel has been selling off foreign currency reserves in order to stabilize the Shekel.
How long can Israel continue selling foreign currency reserves? I didn't find the answer, but if you know or have a way to find out, please comment.
There may be other factors at play, such as covert assistance from the United States to boost the Shekel as part of financially supporting the conflict. We don't know for sure yet.
Technically, the chart points to Shekel strength ahead. The downtrend has now been broken to the upside and confirmed a retest. It's riskier due to the conflict, but the Shekel actually looks like a good play right now.
The Israeli Shekel has been the strongest performing currency in the world so far in 2024, even gaining against the US Dollar.
And this is happening even as Israel is a country facing enormous uncertainty and challenges on multiple fronts.
Prior to the Hamas attacks on October 7, 2023, there was already political turmoil around Netanyahu's judicial reform. He faced accusations of corruption that divided the country and hampered functions of government. Protests filled the streets. There was repeated gridlock in electing a government, and there were negative social and economic impacts. Rightfully so, the Israeli Shekel was in a prolonged downtrend against the US Dollar for years.
Since the attacks, Israel has entered a brutal war with enormous costs to civilian life, as well as Israel's global reputation, security and economy.
So why has the Shekel rebounded so quickly after the attacks, broken out of a multi-year downtrend, and actually been the strongest performing currency in 2024 so far?
Two reasons: 1) The Bank of Israel has stated an intention to maintain higher interest rates, while the US Federal Reserve has indicated an intention to lower rates in 2024. 2) Israel has been selling off foreign currency reserves in order to stabilize the Shekel.
How long can Israel continue selling foreign currency reserves? I didn't find the answer, but if you know or have a way to find out, please comment.
There may be other factors at play, such as covert assistance from the United States to boost the Shekel as part of financially supporting the conflict. We don't know for sure yet.
Technically, the chart points to Shekel strength ahead. The downtrend has now been broken to the upside and confirmed a retest. It's riskier due to the conflict, but the Shekel actually looks like a good play right now.