JPMorgan estimates Israel’s upcoming election could drive the shekel by up to 3% in either direction, depending on the outcome.
The bank assigns a 55% probability to an opposition victory, which it projects would strengthen the shekel by 2% to 3% as concerns over judicial reforms ease. A Netanyahu-led victory, by contrast, could weaken the currency by about 3%, according to the report.
The election is scheduled for October 27. JPMorgan notes that prolonged political uncertainty or the formation of a broad coalition may leave the shekel broadly steady, offering limited directional bias.
Historical context underscores the currency’s sensitivity to political developments. The shekel weakened nearly 10% against the dollar between early 2023—when judicial reforms were proposed—and the October 7 Hamas attack later that year.
Current FX market pricing reflects an implied volatility of roughly 1% around the vote, a level JPMorgan analysts describe as "seems low" given the potential for larger swings. The bank cites Israel’s technology sector, a supportive external backdrop, and potential resistance from the Bank of Israel to excessive currency strength as mitigating factors. Regardless of the election result, major shifts in fiscal or economic policy are considered unlikely.
