The Israeli shekel experienced a significant drop on Monday, falling 3% against the US dollar and reaching its weakest level in eight years. This decline in value can be attributed to the increasing violence between Israel’s security forces and Palestinian armed groups in the Gaza Strip.
In addition to the shekel’s plunge, Israel’s benchmark TA-35 stock index also saw a decrease of 0.3% on Monday, extending its decline of 6.5% from the previous day. This decline in the stock market is a reflection of the growing concerns that the conflict may spread, causing instability in the region.
The impact of the conflict in Israel is not limited to the country itself. Stock markets across the Middle East also experienced a dip as a result of the escalating violence. Dubai’s benchmark gauge lost 2.8% of its value, Egypt’s EGX 30 dipped 0.6%, and Saudi Arabia’s Tadawul All Share Index slid 0.55%.
The recent escalation in violence can be traced back to an attack by the militant group Hamas on Saturday. Hamas launched thousands of missiles at Israel and deployed militants to infiltrate Jewish settlements near the border with Gaza. In response, Israeli authorities initiated ‘Operation Iron Swords’ to defend against these attacks. Since the beginning of the conflict, hundreds of Israelis and Palestinians have reportedly lost their lives.
To stabilize the shekel and provide necessary liquidity in the market, the Bank of Israel announced plans to sell up to $30 billion and extend up to $15 billion through swap mechanisms. This move marks the first time the Bank has taken such measures to support the shekel since allowing the currency to trade freely.
In a statement released on Monday, the Bank stated, “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.” The regulator also assured that it would closely monitor the situation and take necessary action if needed.
The impact of the conflict between Israel and Palestinian armed groups extends beyond the financial realm. With growing concerns about the stability of the region, experts warn that the oil market could be in danger. As tensions continue to escalate, it is essential to closely monitor the situation and its potential impact on various sectors.
This ongoing conflict not only has significant consequences for the people directly involved but also has far-reaching implications for regional stability and global markets. As the situation develops, it is crucial for all parties involved to prioritize de-escalation and seek a peaceful resolution.