The Shekel Is on a Strengthening Trend! Israeli Institutions Are Strong, JP Morgan Announces

The international investment corporation JP Morgan: the danger to the Israeli economy is mainly noise and does not change our assessment that the shekel is on a strengthening trend. Israeli institutions are strong.

"It has limited financial impact": the American bank JP Morgan Chase (NYSE:JPM) presented a completely different position from that of the hundreds of senior economists who this week expressed concern about the possible damage of the legal reform to the Israeli economy. In the review from JP Morgan's trading desk, it wrote:

"Although this policy may be controversial domestically, it has a limited financial impact, unless we see a real deterioration in the fiscal position or the independence of the Bank of Israel (neither of which appears likely for now)."

It should be noted that the review was sent on Thursday afternoon. Accordingly, last Friday Prime Minister Binyamin Netanyahu held a meeting with senior economy officials, during which bankers warned him about the withdrawal of deposits from Israeli banks that began last week. In response, the bank index fell by almost 5% on Sunday in trading on the Tel Aviv Stock Exchange.

Contrary to the current position following Netanyahu's meeting with the banks last weekend, economists at the American investment bank "Goldman Sachs (NYSE:GS)" wrote in their weekly review that the shekel could continue to weaken in the short term because of the uncertainty surrounding the legal reform.

At the beginning of last week, UBS (NYSE:UBS) and Bank of America (NYSE:BAC) expressed a similar position and wrote that they recommend buying the dollar against the shekel, but they did not tie their recommendation to the legal reform in Israel, but to the government's fiscal measures. One way or another, time will tell to what extent the legal reform will affect the Israeli economy.