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Shekel Edges Ahead Of Most EMEA Peers Despite Denial Of Compromise Deal Rumours

ILS

The shekel is among top EMEA performers today, even as spot USD/ILS has added 55 pips so far, following a bout of volatility inspired after hours yesterday by reports pointing to a potential compromise over the notorious judicial overhaul and exacerbated by low-liquidity conditions. When this is being typed, USD/ILS trades at 3.7933, with bulls setting their sights on yesterday's high of 3.8422. As a reminder, broader risk aversion supports USD/EM crosses today.

  • BoI Governor Yaron spoke with Bloomberg today, after the central bank's expected on-hold rate decision. The official said that interest rates are currently restrictive and high enough to support the ailing currency and ensure that inflation eases into the +1%-3% Y/Y target range, which he expects to happen in 1Q2024.
  • Moving into political matters, Yaron said that the shekel's past correlations are masked by the fallout from domestic politics. The official added that he "will take the holiday that is coming here within the next couple of weeks" to decide whether to seek another term as BoI Governor.
  • Meanwhile, today's news flow may have dampened enthusiasm about the reported progress in judicial overhaul talks. Justice Minister Levin and Prime Minister Netanyahu denied reports suggesting that Likud agreed to a compromise deal proposed by President Herzog, as did Yesh Atid MK Ben-Barak.

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