Israel’s shekel drops as Wall Street’s main indexes fell and dozens of rockets from Lebanon were fired by the Iran-backed terror group Hezbollah at northern Israel.
The local currency fell 1.4 percent against the dollar to 3.72 and by 1.5% against the euro to 4.11. The S&P 500 Index was down more than 2% and the Nasdaq Composite Index slid over 3% on Tuesday.
“We are seeing a lot of volatility in the shekel exchange rate in recent weeks going up or down in response to local current events related to the military actions or the hostage deal,” says Ronen Menachem, chief markets strategist at Mizrahi Tefahot Bank.
“Today, the shekel depreciated following yesterday’s sharp stock declines on Wall Street and also in reaction to local military developments as rockets were fired from Lebanon to the north of Israel and there is more uncertainty about a hostage deal,” Menachem says.
“Local financial institutions have exposure to foreign currency so when US markets are down they sell shekels and buy dollars to make up for it, which puts pressure on the local currency,” he explains.
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