Shekel Wobbly as Israel Crisis Averted But Tensions Continue
(Bloomberg) -- The shekel strengthened and then weakened again on Wednesday as Israel’s Parliament debated which candidates would serve on a key judicial selection committee, eventually voting in only one and stalling on naming a second.
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The winner was the nominee from the opposition, Karine Elharrar, a defeat for the ruling coalition of Prime Minister Benjamin Netanyahu. Opposition leaders had vowed that if she’d been defeated, they’d walk out of negotiations for judicial changes.
But after they won that vote, they said the battle wasn’t over.
“The committee has not been established, and the threat to our democracy has not been removed,” Yair Lapid, opposition leader said in a statement. “No committee, no talks,” he added, raising the possibility that negotiations for a compromise on the judicial overhaul would still be suspended.
The shekel, which had depreciated as much as 2.5%, began strengthening as the vote took place, then weakened again after Lapid’s statement, trading at 3.57 shekels to the dollar at 7:05 p.m., a 0.3% fall from the opening rate.
The lawmakers were set Wednesday to elect two members of the powerful judicial selection committee, which makes crucial bench appointments. Netanyahu, facing tremendous pressure from his coalition, finally ruled that only one candidate would be chosen in the day’s vote and a second at a later date.
His far-right government is seeking to curtail the power of top judges and increase the role of the government in their selection. The opposition and coalition have entered talks to seek a compromise on the overhaul, which has sparked six months of massive protests, mostly by secular Israelis on the center and left who argue it would reduce judicial independence and undermine democracy.
Read More: Why Israel Is Bitterly Split by a Judiciary Overhaul: QuickTake
Ronen Menachem, chief market economist at United Mizrahi Tefahot Bank, has noted that the shekel has become volatile and, unlike the recent past, linked to political developments. Today, he said, was a good example.
“Earlier, when it seemed like there would be a political deadlock, the shekel depreciated quickly but then the hours passed and it looked like it would be avoided and the shekel appreciated and nearly erased losses,” he said. “During the next few weeks one can expect considerable volatility of shekel to continue.”
(Updates throughout with shekel appreciation and results of vote)
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