Investment bank Meitav CEO: Dollar price is referendum on finance minister

Investment bank Meitav CEO Zvi Stepak believes that the present price of the dollar serves as a continuous referendum on the finance minister, calling it a Silvan Shalom index and saying the index suggests the public believes in the dollar rather than in Shalom.

Stepak said the recent shekel devaluation isn't related to the security situation or to the plans of the treasury to impose tax on the capital market. The shekel weakness reflects lack of confidence in the economic leadership, and the economic irresponsibility of the treasury, he remarked.

"There's a new situation in the capital market, such as has never existed before. Players are hoping for an interest rate hike. They are actually pleading that the Bank of Israel raise lending rates and restore market confidence," he said.

He added that bonds such as Shahar, which are unindexed and bear fixed interest, are trading at 8% to 9% yield, apparently constituting a great buy opportunity, but this is one big market over-reaction. "But it's impossible to make decisions because it isn't clear whether the rules of the game have changed. If we are headed into a severe economic scenario, why shouldn't interest rates be 12%? To a certain extent this is reminiscent of the provident funds crisis in the summer of 1996, which we are approaching. Unless the economic leadership comes to its senses, the economy is moving toward a very delicate and brittle crossroads," Stepak stated.

He said that even if the governor of the Bank of Israel raises interest rates, it isn't certain this will calm the markets. "For the first time I am not asked in which instrument to invest ¿ dollar, index, or shekel instruments ¿ but whether it's at all worthwhile leaving money in the country. Yesterday I received five calls from customers who asked whether they should transfer the money overseas," Stepak said.