Fin Min Chief Econ-Court Reforms Could Unnerve Investors, Harm Economy

Reuters carrying comments attributed to the finance ministry chief economist stating that the 'judicial overhaul could raise uncertainty by investors and may harm [the] economy'. Comes as Bank of Israel Governor from 1991-2000,Jacob Frenkel, criticised the gov't of PM Benjamin Netanyahu for the proposed judicial reforms, as well as Foreign Min Eli Cohen's lambasting of the BoI for raising interest rates amid multi-year high inflation.

• Recent BoA research note states: "Political noise in Israel doesn't usually impact Israeli assets or economic policy but we believe this time is different. Local sentiment has the potential to cause domestic investors to shift their portfolios away from shekel-based assets. The shekel has recently broken its long-standing correlation with the US equity market. If this sentiment continues we expect further shekel depreciation. The Bank of Israel could intervene in the currency rather than increase its policy rate further, as it is close to ending its hiking cycle, and hikes usually have little effect on the currency when the underlying factor behind depreciation is confidence."