Connect with us

Hi, what are you looking for?

Jewish Business News

Business

Goldman Sachs Issues Warning That Judicial Reforms Could Sink Shekel

Shekel NIS

None other than the famed financial firm Goldman Sachs has come out and stated that the judicial reforms proposed by Benjamin Netanyahu’s government could harm Israel’s economy and cause the Shekel to drop in value. The assessment came as part of a report issued by Goldman Sachs’ economics research department. And it also came just after Israel’s own major firm Papaya Global announced that it was divesting its funds from Israeli Banks because of the judicial reform plan.

This constitutes yet another blow to Israel’s Prime Minister Benjamin Netanyahu’s aspirations to effect a complete overhaul of Israel’s judicial system, including new restrictions on the authority of the nation’s attorney general and a new law that would allow an absolute majority of at least 61 votes in the Knesset to override any Supreme Court decision, effectively mooting the court. This, opponents say, would leave the government free to do whatever it wants in the absence of any oversight, thus harming Israeli democracy and, in turn, scaring off foreign investors who would lose faith in the country.

Please help us out :
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at office@jewishbusinessnews.com.
Thank you.

Goldman Sachs acknowledged that “a definitive judgment” on the matter at this time “seems premature,” because the proposed reforms have yet to be implemented. And, should the Shekel actually depreciate considerably, the Bank of Israel could always step in and a buy up Shekels with foreign currency reserves to prop it back up.

“But perhaps most importantly, there are few signs that recent developments would affect the institutional hedging behavior of local investors, which likely underpins the striking correlation between USD/NIS and global tech stocks that have driven the shekel for years,” said Goldman Sachs.

“Overall, while the recent increase in political uncertainty is concerning and could continue to be reflected in some further shekel weakness over the short-term, the fundamental links that have been established between USD/NIS and global tech stocks will take time to erode.”

Goldman Sachs pointed out that judicial reforms proposed by Prime Minister Benjamin Netanyahu’s government have “sparked concern among some investors, including locals, that the reforms could reduce judicial independence in Israel, and that – for example, by eventually reducing FDI (foreign direct investment) or tech sector growth in Israel – the shekel may become more subject to domestic policy risks than it has been in recent years. In line with these concerns, USD/NIS has seen a notable deviation this week from its typical correlation with global tech indices.”

“Overall,” Goldman Sachs concluded, “while the recent increase in political uncertainty is concerning and could continue to be reflected in some further shekel weakness over the short-term, the fundamental links that have been established between USD/NIS and global tech stocks will take time to erode.”

Last week, Eynat Guez, Co-Founder and CEO Papaya Global, an Israeli fintech unicorn explained her company’s decision on divestment tweeting, “Following Prime Minister Netanyahu’s statements that he is determined to pass reforms that will harm democracy and the economy, we made a business decision at Papaya Global to withdraw all of the company’s funds from Israel, in the emerging reform, there is no certainty that we can conduct international economic activity from Israel, this is a painful but necessary business step.”

Newsletter



Advertisement

You May Also Like

World News

In the 15th Nov 2015 edition of Israel’s good news, the highlights include:   ·         A new Israeli treatment brings hope to relapsed leukemia...

Entertainment

The Movie The Professional is what made Natalie Portman a Lolita.

Travel

After two decades without a rating system in Israel, at the end of 2012 an international tender for hotel rating was published.  Invited to place bids...

VC, Investments

You may not become a millionaire, but there is a lot to learn from George Soros.

Copyright © 2021 Jewish Business News