Currency Insights: Israeli Shekel’s Resilience Amidst $30 Billion Forex Sales

Jerusalem, [09 October] – In response to the recent wave of military attacks between Israel and the Hamas movement in Palestine over the weekend, the Bank of Israel, the nation’s central bank, unveiled a significant initiative on Monday. The central bank announced a program aimed at selling up to $30 billion in foreign exchange reserves to bolster market stability.

Bank of Israel Launches $30 Billion Forex Sale Program to Stabilize Markets After Weekend Hamas Attacks

As the markets opened on Monday, the Israeli Shekel (ISL) faced a substantial bearish gap against the US Dollar (USD). The exchange rate inched up to its highest level since February 2016, reaching 3.9230, before retreating to the 3.9050 range in response to the central bank’s stabilization program. Despite the volatility, the currency pair managed to maintain a 1.40% gain for the day.

The Israeli Shekel experienced a significant decline in Asian trading on Monday morning, a direct consequence of the recent military attacks. The currency depreciated by more than 1.6% against the US Dollar, hitting its lowest point since 2016 at Shk3.9581. During this time, Shekel’s trading volumes remained limited, contributing to increased market volatility.

The Bank of Israel’s announcement indicated its intention to sell up to $30 billion of foreign currency holdings as part of an effort to stabilize Shekel’s exchange rate and ensure market functionality. This marks the central bank’s first-ever foreign exchange sale and includes the provision of dollar liquidity to local financial institutions. The unprecedented program aims to mitigate volatility in the Shekel’s exchange rate while ensuring market liquidity.

In addition to the $30 billion direct sale, the central bank will also extend up to $15 billion through swap mechanisms, as detailed in their official statement. The Bank of Israel’s decisive actions seek to address market uncertainties following the surprise attacks by Hamas militants.

This strategic move by the central bank aims to provide stability to the Israeli financial markets amid challenging geopolitical circumstances, ultimately safeguarding the nation’s economic well-being.