The Israeli shekel took a further tumble to 3.8039 against the US dollar on Monday, its lowest rate since 2017.
The shekel has lost two percent against the dollar since the beginning of last week, and 5% since the start of August.
Former finance minister Avigdor Liberman, who held the position in the previous government, criticized his successor Bezalel Smotrich and Prime Minister Benjamin Netanyahu, accusing them of “simply destroying Israel’s economy.”
“One piece of data is stronger than all the talk and chatter of Prime Minister Netanyahu and Finance Minister Smotrich,” tweeted Liberman, leader of the opposition Yisrael Beytenu party. “The dollar breaking records and reaching a rate of 3.8, a five-year record.”
The euro has also gained around 3% against the shekel since the beginning of the month and at the end of last week the exchange rate was NIS 4.1206 for one euro.
Analysts at banks and investment houses increased their expectation that the Bank of Israel will raise the interest rate by a quarter of a percentage point on September 4, reaching 5%, while prime interest will rise to 6.5% compared to 1.6% in 2022.
An identified source from a major bank told the Ynet news site that the dollar is heading for the four-shekel mark, raising concerns of an interest rate hike.
“There is a chance that the Bank of Israel will sell dollars in the coming days to lower the [exchange] rate since it holds more than $200 billion, some of which was bought at a price cheaper than the current rate,” the source said.
The shekel’s slip against foreign currencies is already being felt in the price of imported goods, such as cars and electrical appliances.
Analysts say the shekel’s poor showing is due to concerns over the ongoing political turmoil surrounding the government’s planned overhaul of the judiciary, which has met with months of mass protests.
The main concern in the business and tech community is that the proposed judicial overhaul will erode democracy and weaken checks and balances, which will make venture capitalists and other money-makers leery of investing their money in the country and trigger an outflow of funds.
In addition, during the summer season many Israelis purchase foreign currencies for use on vacation abroad, further pushing down the shekel.