As the Middle East war develops, the Israeli shekel plummeted to a nearly eight-year low versus the US dollar on Monday. On Saturday, Hamas fighters killed 700 Israelis and kidnapped dozens more as they invaded Israeli towns. On Sunday, Israeli air raids in Gaza targeted housing buildings, tunnels, a mosque, and the homes of Hamas officials. During Asian trading hours, the currency pair is rather quiet. The shekel last traded at 3.9581 against the US dollar, down more than 3%.
The bank will operate in the market during the coming period in order to moderate volatility in the shekel exchange rate
Before the Hamas attack, the shekel was already under pressure as Prime Minister Netanyahu was set to follow through with measures that weakened the country’s judiciary system despite a series of protests earlier in the year. The Bank of Israel on Monday said it would sell up to $30 billion of foreign currency in the open market, in the central bank’s first-ever sale of foreign exchange, to maintain stability during Israel’s war with Palestinian militants in Gaza.
“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,” it said in a statement. The central bank also said it would provide liquidity through SWAP mechanisms in the market of up to $15 billion. “The Bank of Israel will continue monitoring developments, tracking all the markets, and acting with the tools available to it as necessary,” it said. Ahead of the announcement, the shekel had weakened by more than 2 percent to a more than 7-1/2 year low of 3.92 per dollar. The shekel now stands at a rate of 3.86, down 0.6 percent.