In a report on Friday, Goldman Sachs strategists said they now expect the shekel to trade at 3.70 against the dollar in the next three months and 3.60 in the next 12 months. That's down from their previous forecasts of 3.50 and 3.40, respectively.

The strategists cited several factors for the downgrade, including:

• Renewed concerns about Israeli politics: The shekel has encountered increased pressure, driven by concerns over Prime Minister Benjamin Netanyahu's efforts to reform and democratize the judiciary system.
  
  
• Central bank's reluctance to intervene: The Bank of Israel has been reluctant to intervene in the currency market to support the shekel. In a recent interview, Deputy Governor Andrew Abir said that the central bank would only intervene if there was a "severe" threat to the currency.
  
  
• Weaker global economy: The global economy is also slowing, which is weighing on the shekel. The Israeli currency is often seen as a safe haven asset, but it has lost some of its appeal as investors have become more concerned about the global economy.

The Goldman Sachs downgrade comes as the shekel is already trading near its weakest level in two years. The currency has been under pressure since the start of the year, and it has lost more than 5% of its value against the dollar so far in 2023.

The shekel's weakness is a concern for the Israeli economy. The currency is a major driver of inflation, and a weaker shekel could lead to higher prices for consumers. The central bank is expected to raise interest rates in the coming months in an effort to curb inflation, but it is unclear whether that will be enough to offset the impact of a weaker shekel.

The shekel's weakness is also a concern for Israeli businesses. Many Israeli companies export their products, and a weaker shekel makes their products less competitive in international markets. The weaker shekel could also lead to higher costs for imported goods, which could hurt Israeli businesses and consumers alike.