Skip to content

What’s next for Israeli shekel after sinking to 8-year low vs. USD?

What's next for Israeli shekel after sinking to 8-year low vs. USD?

As the hostilities between Israel and Hamas continue, the Israeli national currency, the shekel (ILS), has sunk to its lowest level against the United States dollar (USD) in over eight years amid investor uncertainty regarding the potential financial cost of a long war.

Indeed, the USD/ILS trading pair had recently crossed the threshold of 4 per dollar for the first time since March 2015, as Israel entered its 10th day of armed conflict with Hamas, with the shekel trading at 4.01823 to the US dollar, according to the information retrieved on October 17.

USD/ILS trading pair. Source: TradingView

Specifically, back on March 20, 2015, the shekel was trading at 4.057 amid the dollar’s advance that brought it to near-parity with the euro (EUR). Since then, the Israeli fiat currency neared this level again (at 3.88598) only once – in March 2020, at the beginning of the Covid-19 pandemic.

Decline persists

Meanwhile, the continuous decline of the shekel has persevered despite the Bank of Israel announcing last week a plan to try and mitigate the currency’s volatility by selling $30 billion in foreign currency in the open market in what would be the first-ever sale of foreign exchange for the country’s central bank.

One of the sources of the ongoing pressure appears to be the concerns regarding Israel’s mass mobilization for the war against Hamas but also about the possibility of the conflict spreading and dragging in other nations, such as Iran, Lebanon, or Syria.

Signs of hope

As Nicholas Farr, emerging Europe economist at Capital Economics, explained:

“Israel’s economy has proven resilient to conflicts in the past and been able to adapt over time, which has often limited the direct impact on the economy. But a much larger and longer-lasting war this time risks larger spillovers to the labor market and economy.”

In Farr’s view, Israel’s central bank currently has $200 billion in foreign reserves, which should help it support the shekel if selling pressure intensifies even further and protect it from collapse, as he told MarketWatch’s Joseph Adinolfi on October 16.

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.

Best Crypto Exchange for Intermediate Traders and Investors

  • Invest in 70+ cryptocurrencies and 3,000+ other assets including stocks and precious metals.

  • 0% commission on stocks - buy in bulk or just a fraction from as little as $10.

  • Copy top-performing traders in real time, automatically.

  • Regulated by financial authorities including FCA and FINRA.

2.8 Million Users
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. eToro USA LLC does not offer CFDs, only real Crypto assets available. Don’t invest unless you’re prepared to lose all the money you invest.

Read Next:

Weekly Finance Digest

Related posts