War In Israel. Shekel In Free Fall
Israel's central bank will sell $30 billion to support the national currency, which has depreciated by about 2% against the dollar in less than three days
Hamas’s attack on Israel came at a cost to Israel’s national currency, the shekel. In less than three days, the Israeli currency fell 1.8% to 3.9146 per dollar. This is the weakest shekel exchange rate in the last eight years.
Both the Israeli military and the Jewish state’s foreign exchange market were caught off guard by Hamas’s lightning onset. Even the United States, Israel’s closest ally, whose satellites spy day and night on every square inch of Earth, rested on its laurels. Just over a week ago, US National Security Advisor Jake Sullivan said that “the Middle East region is calmer today than at any time in the last two decades.”
And while the Israeli army continues to bomb the Gaza Strip and Hamas threatens to “kill one hostage on live television for every air attack carried out without informing the civilian population,” the Jerusalem-based Central Bank of Israel announced “the sale of foreign currency worth 30 billion dollars” to help the shekel emerge from its current free fall. In addition, as part of an “emergency support program,” the Central Bank will provide additional liquidity of up to $15 billion in the country’s foreign exchange market.
A representative for the Central Bank of Israel stated that “the regulator will act in the market in the coming period to mitigate the volatility of the shekel exchange rate and provide the liquidity necessary for the continued proper functioning of markets.”
The devaluation of the shekel, apparently, was only the first alarming signal for the Israeli economy. In the last few hours, prices for both stocks and bonds have fallen. In fact, the Tel Aviv Stock Exchange’s two main stock indexes, TA-125 and TA-35, fell by almost 7%, especially due to the collapse of banking stocks that fell by 9%, while Israeli government bond prices lost about 3 percent.
