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Shekel Depreciation Continues, USD/ILS Moves Past 4.00 Mark


Spot USD/ILS yesterday crossed above the psychologically significant 4.00 figure for the first time in more than 6 years, extending gains past resistance from Feb 22, 2016 high of 4.0035, with little on the wires to assuage familiar geopolitical concerns. The pair last deals +128 pips at 4.0295, with bulls looking for a clearance of Mar 20, 2015 high of 4.0682.

  • The Jerusalem Post ran a report suggesting that the IDF is delaying its full-scale operation in Gaza amid concerns that Hezbollah is waiting until Israel commits a significant number of troops there before launching an offensive from the north.
  • US President Joe Biden will head to Israel on Wednesday to show solidarity with the country following the attack by Hamas militants. Biden will be the first foreign head of state to visit Israel since the attack.
  • The Bank of Israel will announce its rate decision next Monday, with some contradictory calls trickling through already. Citi said that the war-torn country could lower rates by 75bp, while BDO Consulting Israel said that the BoI "will have to cut interest rates". By contrast, Bank Hapoalim said that "cutting interest rates and selling foreign currency are contradictory" and Goldman Sachs expect an on-hold decision.
  • Israel's 5-Year CDS premium continues to climb, reaching 129bp yesterday.

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