Throughout the subsequent few days the US is predicted to finish the deployment of its army forces within the Center East prematurely of a attainable strike on Iran and even perhaps the overthrow of the regime of the ayatollahs. Daily we hear of the plane provider USS Abraham Lincoln nearing the area, carrying dozens of fighter plane and 1000’s of troops, along with submarines and destroyers. How will an assault have an effect on the capital market in Israel and the US dollar-shekel change charge? The specialists sketch the primary eventualities.
1. The Iranian regime falls
“One occasion may deliver the dollar-shekel change charge to NIS 2/$, and that’s the fall of the regime in Iran. Such a state of affairs would lead to an enormous move of capital to Israel, a pointy drop in Israel’s danger premium, financial progress within the area, and funding at traditionally excessive ranges.” That is the prediction of Prof. Leo Leiderman, head of the Institute for Analysis of Financial Methods (IRES) on the Peres Tutorial Middle, chief financial adviser at Financial institution Hapoalim, and previously head of the Analysis Division on the Financial institution of Israel. He made the remarks at a convention held by Horizon Capital Markets final week.
This can be a stunning forecast, because it means additional appreciation of the shekel by tens of proportion factors, when it’s already very robust. The shekel is at the moment traded in opposition to the US greenback at round NIS 3.13/$, nearly an historic peak. In line with Matan Shitrit, chief economist at Phoenix Monetary, making use of the “simplistic mannequin” introduced by the Financial institution of Israel a couple of months in the past whereby the shekel-dollar charge is correlated with the S&P 500 Index, the change charge ought to by now be at NIS 2.95/$.
Speaking to “Globes”, Leiderman confirmed his forecast, and stated, “There is no such thing as a sacred quantity that represents a barrier. At one time it was thought that the shekel-dollar charge couldn’t fall under NIS 3.3/$. Then they stated that the Financial institution of Israel wouldn’t permit it to fall under NIS 3.2/$. It’s definitely conceivable that the change charge may go a lot decrease. For instance, have been we to get up one morning to seek out that the present regime in Iran had fallen and that Teheran was headed for a brand new actuality, it’s cheap to suppose that on that very day we’d see the shekel a good distance under NIS 3/$. The Israeli forex may even attain NIS 2/$. It’s a matter of provide and demand, and we’re speaking about an inflow of international forex. If there’s a increase in Israel’s monetary markets, the inventory market will rise and naturally bond yields will fall, as will Israel’s danger premium.”
Leiderman factors out one other risk that will result in an analogous consequence. “If Saudi Arabia joins the Abraham Accords, the identical phenomenon will happen. It should sign a major decline in geopolitical danger in Israel particularly and in the whole Center East, and so monetary and non-financial inward funding in Israel and within the area typically will develop considerably.”
Mizrahi Tefahot Financial institution chief markets economist Ronen Menachem agrees that the shekel may proceed to strengthen, however says that the NIS 2/$ situation is excessive. “Change within the regime or within the character of the regime in Iran is already partly priced into the shekel change charge and within the inventory market as effectively,” he says. Regardless of that, he agrees that such a growth would scale back the uncertainty surrounding Iran and its proxies and says that “a reducing of the safety risk would work in favor of the shekel.”
Menachem agrees that such a situation may give a push to a regional peace course of and to broadening of the Abraham Accords, and accordingly additionally give a push to the shekel in opposition to the US greenback. “There can be a considerable enchancment in sentiment in direction of the Israeli financial system and the capital market, amongst each Israeli and international buyers,” he believes.
2. No assault on Iran
There’s additionally the alternative risk, that no assault takes place and the edges return to negotiations on a nuclear settlement. In Menachem’s view, this can be a center situation. “There can be some discount within the degree of risk from Iran and its proxies, however we received’t see any substantial change within the shekel-dollar change charge.”
Horizon Capital Markets founder and CEO Itay Lipkovitz believes that foot-dragging is probably the most unfavourable situation for Israel. “The Iranians can proceed producing ballistic missiles and rehabilitating the army capabilities that we hit in Operation Rising Lion, and they’re going to proceed to arrange themselves for a future battle, which implies that the market will even proceed to cost in a future battle.
“Such a situation may proceed for a 12 months. The truth that the People have despatched giant forces to the area doesn’t imply that they’ll use them ultimately. You must keep in mind that mid-term elections will quickly happen within the US, they usually received’t need to attain them after an extended struggle. If their evaluation is that an assault on Iran will entangle them, they received’t go forward for my part, or they’ll assault in a restricted means simply to tick the field. In that occasion, the shekel-dollar charge received’t go under NIS 3/$.”
3. A brief struggle with Iran
A 3rd attainable situation is a brief struggle with Iran. “A brief struggle could lead on the markets to the conclusion that there can be a fall within the degree of danger, that the probabilities of one other struggle have declined, and that the probabilities of regional preparations have risen. “That state of affairs may have a optimistic influence on the shekel, however the influence can be pretty minor,” says Menachem.
Lipkovitz is satisfied that this can be a good situation. He does assume that within the brief time period it is going to be accompanied by uncertainty and that the shekel will weaken and the markets will fall, however he says that after two or three weeks the state of affairs will stabilize. “Even when the Iranian regime doesn’t fall however its capabilities are hit, that may very well be optimistic for the markets,” Lipkovitz explains. “A worsening of Iran’s financial issues would additionally cut back Israel’s danger premium and convey extra international buyers right here, strengthening the shekel and native inventory market considerably,” he says.
4. An extended struggle with Iran
There’s additionally the situation during which the marketing campaign in opposition to Iran run into bother. In Menachem’s view, an extended struggle with Iran and its proxies, which is able to hit Israel’s GDP, deliver additional assaults by the Houthis in Yemen, and will make the US rethink its coverage within the area, is probably the most unfavourable situation for Israel, and can be liable to result in the shekel depreciating in opposition to the US greenback.
So far as Leiderman is anxious, any consequence that’s not the autumn of the Iranian regime would be the similar as the current state of affairs. “In that occasion, we stay with the chance that Iran has nuclear capabilities,” he says. “One other vital query is what’s going to occur the day after? Take Venezuela for instance. Trump captured Maduro, however buyers aren’t going again there as a result of Maduro’s persons are nonetheless operating the nation, and the street to alter remains to be an extended one.”
At any charge, everybody agrees about one factor, specifically that every one the eventualities are very fluid. It’s sufficient to take a look at the shekel-dollar change charge up to now few years, because it crashed in opposition to the greenback to over NIS 4/$ after the October 7 bloodbath, after which made all of it the way in which again to NIS 3.13/$, Furthermore, whereas the Israeli economists speak concerning the shekel being prone to proceed strengthening, Citi estimated solely lately that it may really weaken to NIS 3.8/$. “There’s a really broad vary of eventualities,” Menachem concludes.
Printed by Globes, Israel enterprise information – en.globes.co.il – on January 26, 2026.
© Copyright of Globes Writer Itonut (1983) Ltd., 2026.
