Israeli currency drops to eight-year low

The shekel has plunged amid the escalation in violence following an attack by militant group Hamas

The Israeli shekel fell 3% against the US dollar on Monday to trade at more than 3.96, marking its weakest level in eight years. The currency has plunged amid the escalation in the conflict between Israel’s security forces and Palestinian armed groups in Gaza. 

Israel’s benchmark TA-35 stock index also dropped on Monday, falling 0.3% and extending a 6.5% decline from Sunday. 

Stock markets across the Middle East likewise dipped due to concerns that the conflict could spread. Dubai’s benchmark gauge lost 2.8%, Egypt’s EGX 30 dipped 0.6%, and Saudi Arabia’s Tadawul All Share Index slid 0.55%.

On Saturday, Palestinian armed group Hamas launched thousands of missiles at Israel and deployed militants to infiltrate Jewish settlements near the border with Gaza. In response, Israeli authorities launched ‘Operation Iron Swords’. Hundreds of Israelis and Palestinians have reportedly been killed since the beginning of the attack.

The Bank of Israel has announced plans to sell as much as $30 billion and extend up to $15 billion through swap mechanisms. The sale of foreign exchange marks the first move of its kind aimed at supporting the shekel since the regulator allowed the domestic currency to trade freely.

READ MORE: Israel-Palestine conflict endangering oil market – experts

“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,” read a statement released on Monday.

The regulator pledged to continue monitoring developments and act with the tools available if necessary.

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