Israel’s shekel dropped more than 2% and government bonds and shares slid after the Knesset passed the first reading of a bill to make contested changes to the county’s judiciary.
The currency fall sent the shekel toward its lowest level since April 2020. Since the beginning of the month the country’s currency is down more than 5% against the U.S. dollar.
The depreciation comes as the country is already grappling with sky-high inflation, with the central bank recently raising interest rates for the eighth time in less than a year.
Local and foreign institutional investors, as well as banking heads and prominent economists, have issued numerous warnings about the potential economic and financial fallout from the judicial shakeup being pushed by Prime Minister Benjamin Netanyahu’s government.
The plan would give Netanyahu’s governing coalition more authority over who becomes a judge. It is part of a broader package of changes that seeks to weaken the country’s Supreme Court and transfer more power to politicians in power.
“Should the proposed judicial changes be fully passed this is very worrying as Israel is going to have a very different economy from where we are now with a strong government and no separation of institutional power,” one economic analyst warned.
The currency drop comes as a new poll found that 17% of Israelis are thinking about taking their savings out of Israel.
Read more at The Times of Israel