USDILS: Shekel Strength Capped in the Near Term

UBS has revised its USDILS forecasts higher through 2Q27, as the Bank of Israel's policy interventions and rate moves act as a near-term cap on shekel strength. Despite this, a positive bias remains in the medium term, contingent on tech sector performance and global market stability.

Key Takeaways

• 1.The Bank of Israel's interventionist stance and rate policy are expected to cap near-term gains for the shekel.
• 2.UBS revised USDILS forecasts higher for 2Q27, reflecting a more cautious near-term outlook for the currency.
• 3.Tech sector volatility remains the primary downside risk for the shekel due to its correlation with the Israeli tech ecosystem.

Table of Contents

• CIO View: USDILS
• Our view and risks
• Key drivers
• CIO Forecast- USDILS
• Factors to watch
• Appendix

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