USD/ILS: Shekel to rebound from weaker levels when conflict de-escalates – MUFG

The Shekel has weakened sharply in response to the conflict between Hamas and Israel. Economists at MUFG Bank analyze ILS outlook.

Move above 4.00 level likely to prove short-lived

Recent history suggests ILS can weaken further during the conflict.

BoI intervention will help to dampen the scale of ILS sell-off. 

ILS weakness could make BoI cautious about cutting rates as market expects. 

Levels above 4.00 for USD/ILS have proven short-lived since the GFC. We expect ILS to rebound from weaker levels once conflict de-escalates.