As tensions escalate between Israel and the Hamas group, the Israeli shekel (ILS) finds itself in a precarious position.
Recent days have witnessed a rapid and unsettling decline in the shekel’s value against the US dollar (USD), pushing it to the lowest point in over seven years on Monday, October 9. This alarming development underscores the profound impact that the ongoing conflict is exerting on Israel’s currency markets.
At press time, the USD/ILS currency pair is sitting at 3.92 – the dollar’s strongest against the shekel since March 2016.
Picks for you
Why is ILS down?
The shekel’s rapid downfall against the greenback comes as the conflict in the Middle East continues to escalate.
Notably, the war between the Hamas militant group and Israeli troops entered its third day on October 9, with casualties on both sides increasing by the hour.
The growing risk sentiment and the deepening political uncertainty left an adverse impact on the Israeli shekel, while safe-haven currencies like the USD and the Japanese Yen (JPY) attracted investors.
Bank of Israel to sell $30 billion of forex to prop up ILS
To shore up its battered currency, the Bank of Israel announced on October 9 that it will sell $30 billion of foreign currency in the open market. The move marks the first-ever sale of foreign exchange for Israel’s central bank.
“The bank will operate in the market during the coming period in order to moderate volatility in the shekel exchange rate and to provide the necessary liquidity for the continued proper functioning of the markets.”
– the Bank said in a statement.
The sale appeared to quickly cap some of the shekel’s losses. Prior to recovering to 3.92 per dollar, the ILS was sitting at a near 8-year low of 3.98 per USD.
Meanwhile, the US dollar index rose 0.35% to 106.4 in the past 24 hours, while the JPY, which investors also consider a safe-haven currency, climbed 0.1% to 149.1.
Start trading forex and stocks CFDs today with Plus500 – a regulated broker with no commissions
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
