“In the short term, there will be some volatility in markets, but we expect this to be manageable. The liquidity support is expected and the Bank of Israel is very much experienced in such matters.”
The goal is to smooth out volatility in the shekel’s exchange rate and provide the necessary liquidity to support markets, according to the Bank of Israel. Policymakers previously resisted supporting the shekel even as investor concerns surrounding the government’s controversial efforts to weaken the power of the judiciary weighed on the currency for months. The shekel is one of the biggest losers this year among a basket of 31 major currencies tracked by Bloomberg.
Citigroup doesn’t “expect further sustained bouts” of the currency’s weakness, while HSBC Holdings said the “shekel is likely to stabilise”.