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Back to square one: shekel weakens amidst resurgence of judicial reform

Israeli waves a flag while protesting the government's planned judicial overhaul, in Tel Aviv, April 1, 2023 (Photo: Shutterstock)

In light of renewed discussions on judicial reform, the shekel is once again experiencing a weakening trend, accompanied by fluctuations in Israeli shares. This follows Prime Minister Benjamin Netanyahu's declaration that his coalition government will proceed with its contentious plan to revamp the judicial system.

During Monday morning trading, the shekel experienced a depreciation of up to 1.6%, with an exchange rate reaching 3.61 against the US dollar. 

The key benchmark TA-125 index on the Tel Aviv Stock Exchange started the day with a marginal decline of 0.1%. However, it demonstrated resilience and ultimately recovered, closing the day with a positive gain of 0.33%.

Following the withdrawal of the opposition from negotiations, Netanyahu announced that his government would unilaterally advance specific components of the judicial reform plan. However, he clarified that the original legislation aimed at securing control over the Judicial Selection Committee would not be revived.

Despite recent gains that had strengthened the shekel by over 3% throughout the month, investor sentiment has been negatively affected by the uncertainty surrounding the judicial overhaul. The opposition's decision to discontinue negotiations has eroded much of the optimism previously held regarding the possibility of reaching a consensus.

It is worth noting that the International Monetary Fund recognized Israel's remarkable economic performance in 2022. However, the IMF expressed concerns about the potential hindrance to growth and negative impacts on the economy due to the uncertain nature of the contentious judicial reforms. The IMF emphasized the need for a politically sustainable solution and underscored the significance of upholding the rule of law as a crucial factor for attaining economic success.

As we watch the situation unfold, a high-stakes showdown looms between the coalition's competing interests and the greater good of the nation. This unfolding drama will provide a riveting spectacle with no dull moments. We hope that rationality and prudence will guide decision-making, given that ordinary Israelis will bear the brunt of the consequences. Therefore, stay tuned to see the thrilling twists and turns that will shape the country's destiny.

This article originally appeared here and is reposted with permission. is a website that takes a unique look at Israel's economy, business, and innovations. It gives an overview of what's going on in the country's financial markets and provides its readers with useful information about Israeli companies that work in Israel and around the world. It is a good source of information for anyone who wants to get to know Israel from a non-political point of view.

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