Israel shekel slumps despite $45 billion central bank pledge
The central bank said it would sell as much as $30 billion and extend up to $15 billion through swap mechanisms as part of an unprecedented program to support markets, according to a statement on Monday.
Stock markets across the Middle East fell amid concerns the war might escalate into a broader conflict, with Dubai’s benchmark gauge losing 2.9%. (Representative Image)
Israel’s shekel slumped even after the Bank of Israel said it was prepared to sell tens of billions of dollars in foreign exchange to support the currency after a surprise attack by Hamas militants on Saturday led the government to declare war.
The central bank said it would sell as much as $30 billion and extend up to $15 billion through swap mechanisms as part of an unprecedented program to support markets, according to a statement on Monday. The goal of operating in the market during the coming period is to smooth out volatility in the shekel’s exchange rate and provide the necessary liquidity, it said.
The Bank of Israel’s extraordinary intervention marks a u-turn from its concern about excessive appreciation and is the first time it’s selling foreign exchange to prop up the shekel since it was allowed to trade freely. The move follows the deadliest attack on Israel in decades, with hundreds dead and Prime Minister Benjamin Netanyahu saying the fight against Hamas in the Gaza Strip will be both lengthy and difficult.
Israel’s currency slid to a session low despite the intervention, after briefly erasing losses when it was announced. The currency was down 2% to 3.9235 against the dollar as of 1:01 p.m. local time, its weakest since 2016.
The country’s benchmark TA-35 stock index rose 0.2% after recouping a loss of as much as 1.3% earlier Monday. The measure plunged 6.5% on Sunday. Stock markets across the Middle East fell amid concerns the war might escalate into a broader conflict, with Dubai’s benchmark gauge losing 2.9%.
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