USD vs the Israeli shekel during demonstrations
Several rallies and demonstrations have occurred in Israel in recent years, and the latest disturbances look to be lowering the shekel. While it is difficult to measure the impact of social unrest on currency exchange rates, there are several elements that influence the value of a currency. In this post, we will study how the demonstrations are influencing the shekel and evaluate the historical tendencies throughout moments of social turmoil in Israel.
Protests in Israel are now focused on a a possible judicial reform that the protestors claim is hurting democracy. But it is hard to define how much of this specifically has weakened the shekel among other factors such as the general strengthening of the dollar, or Israel's central bank raising rates, or other economic factors relating to Israel. Still, it is common belief within Israel that the latest protests are not helping the shekel, to say the least. Here is a quick technical analysis of the USD vs the ILS in the past 9 weeks of unrest.
Israeli shekel vs the US dollar: A technical analysis since the 1st judicial reform demonstration
What happened to the shekel in past social unrests?
The shekel originally fell during the COVID-19 epidemic as investors grew more risk-averse and retreated from emerging nations like as Israel. But, as Israel's vaccination effort continued and the country was viewed as a pioneer in handling the epidemic, the shekel rose and hit its best level in more than a decade versus the US dollar. But, with the latest demonstrations, the shekel appears to be weakening once more.
Looking back on the 2011 social justice rallies, the shekel first fell against major currencies as investors grew increasingly hesitant to engage in the Israeli economy. However, the shekel recovered later in the year, as the demonstrations had no substantial political or economic consequences.
Protests against corruption and the government in 2018-2019 had little influence on the shekel because the political environment remained relatively steady throughout this period. Nevertheless, as the corruption charges against Netanyahu grew and eventually to his resignation from power in 2021, the shekel's value fluctuated.
While demonstrations and social unrest can add to market volatility and uncertainty, their impact on the Israeli shekel is often limited and impacted by a variety of other variables such as global economic circumstances, political events, and monetary policy choices. Yet, the current demonstrations appear to be having a bigger influence on the shekel, and it will be intriguing to observe how the situation develops in the future.
Finally, societal disturbance, such as the current riots in Israel, may have a big influence on a country's currency exchange rates. While it is difficult to forecast how the demonstrations will eventually effect the shekel, investors and traders should be attentive and keep a watch on the situation as it unfolds.
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