Israeli shekel declines by 10% vs. dollar in 2023, Smotrich aims to reassure public

Finance minister says the economic macro data is stable and resilient

Israel’s currency, the Israeli New Shekel (NIS), when compared to other currencies, showed the greatest decline since the COVID pandemic, according to research by the City Index Group, as cited by the Jerusalem Post.

The weakening exchange rate between the shekel and the U.S. dollar has often been pointed to as a symptom of Israel's economic decline since the beginning of the judicial reform.

Since the beginning of 2023, the shekel’s value depreciated by around 10.34% against the U.S. dollar, with a significant dive in value at the beginning of March.

Overall, the shekel has lost 4.73% against the U.S. dollar since the COVID pandemic, followed by the currencies of Russia at -4.67%, and the United Kingdom, Indonesia and Australia with reductions of -3.92%, -3.14%, and -2.20%, respectively.

Despite this report, Israeli Finance Minister Bezalel Smotrich praised the performance of the Israeli economy in a statement on Monday.

“The Israeli economy shows relative resilience and stability in a time of global crisis, and the macro data of the Israeli economy is good and strong," Smotrich wrote.

“This tenacity is sharpened sevenfold in the face of a campaign conducted in recent months by irresponsible parties who are trying to harm the economy in a deliberate way as part of their political struggle against the right-wing government and the important amendments to the Israeli justice system it seeks to pass.”

The Bank of Israel announced its decision to maintain its benchmark interest rate at 4.75% for the second consecutive time on Sunday, reinforcing market expectations and aligning with the consensus among leading economists. The decision comes after a series of consecutive rate hikes that began in April 2022.

The move to keep rates unchanged reflects the central bank's cautious approach in response to evolving economic conditions and moderating inflation, in particular.

In July, the Central Bureau of Statistics announced that the Consumer Price Index (CPI), a strong indicator of inflation, rose only by a modest 0.3%. Over the past 12 months, the index has increased by 3.3%, a noticeable drop from the 4.2% recorded prior to the current release. Economists had been projecting a slightly higher increase, from 0.4% to 0.5%.