The shekel as a safe haven: Goldman Sachs sees the Israeli currency as protection from geopolitics and technological dow

In the face of growing geopolitical tensions in the Middle East and a potential new downturn in the stock market of US technology companies, investment bank Goldman Sachs highlights the Israeli shekel as an attractive protective haven. The bank's analysts predict a recovery in the USD/ILS exchange rate to 3.10, underscoring the resilience of the Israeli currency in turbulent times.

Shekel: a refuge from geopolitics and technological upheaval

The main thesis of Goldman Sachs is that the shekel has unique characteristics that make it an attractive asset for investors seeking asylum. Firstly, Israel, despite its geographical proximity to the hotbeds of tension, demonstrates amazing economic stability. Its high-tech economy, strong institutions and significant foreign exchange reserves allow the country to cope relatively successfully with external shocks.

Secondly, the shekel can serve as a hedge against a potential downturn in the stock market of US technology companies. The Israeli economy is closely linked to the global technology sector, and in the event of a correction on American stock exchanges, investors may shift to assets that they believe are less susceptible to these fluctuations. The shekel, with its relatively low volatility and strong economy, could become such an asset.

Goldman Sachs forecast: USD/ILS to 3.10, but with caveats

Goldman Sachs predicts that the USD/ILS exchange rate will recover to 3.10. This means that the bank expects the shekel to strengthen against the US dollar. However, analysts add an important caveat: the shekel is still overvalued, taking into account trade flows. This limits the possibilities for its further significant strengthening.

Moreover, Goldman Sachs notes that short positions in the Israeli pound (meaning the shekel) are relatively inexpensive compared to other emerging market currencies. This may indicate that, although the bank sees the potential for strengthening the shekel, it also recognizes the presence of factors that may restrain this growth or even lead to short-term corrections.