JPMorgan Says Shekel Now Likely Severed From US Stocks for Good

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The shekel is emerging from a year of political upheaval in Israel with a broken correlation to US equities, a deviation that may be here to stay, according to JPMorgan Chase & Co.

Long more in sync with global technology stocks than domestic drivers, the currency has been set adrift this year as Prime Minister Benjamin Netanyahu’s efforts to wrest more power away from Israel’s courts divided the country and triggered massive street protests.

In the decade through the end of last year, the shekel was one of the rare currencies in the world to strengthen against the greenback, as Israel ran a current-account surplus and benefited from technology investment and increased natural gas exports. But the relationship no longer holds. The shekel has lost nearly 9% against the dollar in 2023, trading in recent days at a three-year low.

Without outright positions on the shekel, JPMorgan said “political risk is likely to remain elevated” as the government’s steps to overhaul the judicial system face challenges in court.

 

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