TEL AVIV — The
Israeli Shekel's exchange rate has experienced
prolonged losses in recent trading sessions, marking its lengthiest losing
streak against the US Dollar in 39 years. The exchange rate reached
approximately 4.07 Shekels to the Dollar, representing the
Israeli currency's
lowest point since December 2014.
اضافة اعلان
Despite this, the Israeli currency and bonds
have continued to decline even after the Bank of Israel's decision to maintain
the interest rate at 4.75 percent during a recent meeting, raising concerns
among investors about the potential escalation of the conflict and its
far-reaching economic impact, Khaberni reported.
As losses accumulate due to the ongoing war
in Gaza, the Bank of Israel revised its economic growth forecast down to 2.3
percent for 2023, down from the previous projection of 3 percent, with an
expected GDP growth of 2.8 percent in 2024. The revised forecast takes into
account various economic implications that might impact both real activity and
financial markets.
It might persist for a while as there is no
apparent resolution in sight
Additionally, an analysis by Bloomberg suggests
that the depreciation of the Israeli Shekel might persist for an extended
period, as there is no apparent resolution in sight for the ongoing Israeli
military actions in Gaza.
A few days ago, Moody's, the investment
services agency, issued a warning about the potential downgrade of Israel's
credit rating due to the severity of the military escalation with the Hamas
movement and Palestinian factions in Gaza. A credit rating downgrade could
result in increased borrowing costs for Israel as the country prepares for what
might become a prolonged conflict.
Compounding the risks are the weak growth
rates in the Middle East and North Africa countries, which are expected to
decrease to 2 percent this year compared to over 5 percent last year, according
to a report from the International Monetary Fund on the sidelines of the annual
meetings of the IMF and the World Bank held in Marrakech during the first half
of October.
Without the Bank of Israel's intervention
with a package valued at $45 billion, volatility in exchange rates would have
been much more significant.
In a recent report, the Israeli newspaper
Yedioth Ahronoth stated, "The technology industry in Israel is facing a
crisis that will negatively impact the country's economy, with many Israelis
working in this field enlisting for military service."
A few days ago, the Fitch credit rating
agency placed Israel's long-term debt under negative credit watch, indicating
its readiness to downgrade the credit rating. This was due to the risk of other
anti-Israeli entities, such as Iran and Hezbollah, joining the wide-scale
conflict.
The Israeli Ministry of Economy has been unable
to estimate the economic sectors that have lost the most significant number of
reservists. However, most of those joining the battle are under the age of 40.
These younger residents play a crucial role
in the Israeli technology sector, which accounts for approximately 20 percent
of the annual GDP.
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