The value of the US dollar against the Israeli shekel has continued its downward trend, currently trading at approximately 3.88 NIS. This marks a decrease of over one percent since the previous Friday. Simultaneously, the Euro is trading at around 4.18 NIS, showing signs of slight weakening. This fluctuation in currency exchange rates has been a topic of keen interest since the begining of the war in Gaza over a month ago.
At the outset of the conflict, the dollar exhibited a surge against the shekel, reaching its peak at nearly 4.10 NIS about a week and a half ago. However, since then, it has been on a consistent downward trajectory. The financial markets in the Tel Aviv Stock Exchange (TASE) experienced a similar pattern. The trading day commenced with prices on the rise, but as the day progressed, a shift occurred. Ultimately, leading indexes witnessed a decline, with the TA-35 index falling by approximately 1.3%, and the TA-125 index decreasing by about 1.1%.
‘There is no work’: War and regional tensions have rippled through Israeli markets, with the shekel tumbling below 4 to the dollar https://t.co/YPI7A66aab pic.twitter.com/4E5PWKsWx0
— Financial Times (@FT) October 23, 2023
The notable resurgence of the shekel began last Friday, coinciding with a relatively non-threatening speech by Hassan Nasrallah. During this speech, the dollar-to-shekel exchange rate dropped from 3.99 NIS to 3.92 NIS. As the forex trading week commenced, another significant depreciation was observed. Within a span of a week and a half, the dollar-shekel exchange rate experienced a drop of nearly 5%, while the Tel Aviv Stock Exchange (TA-35) saw an increase of over 7%. These developments suggest that both the currency exchange rate and the stock market indices are approaching pre-war levels.
Experts in the foreign exchange market attribute the decline since the previous Friday to the expectation that the Israeli Defense Forces (IDF) military campaign will primarily focus on Gaza. A senior banking official elaborated, stating, "Judging by the stock exchanges and the shekel-dollar exchange rate, it appears that the campaign will be concentrated in Gaza alone. Ultimately, the IDF is expected to achieve its objectives against Hamas, leading to a significant improvement in the region's security situation. Despite the substantial economic costs of the conflict, there is optimism that the long-term security threat emanating from Gaza will be substantially diminished."
BREAKING: Israel's shekel has fallen to its weakest level against the US Dollar in 8 years
— The Spectator Index (@spectatorindex) October 16, 2023
In Israel, anticipation was high until Friday regarding whether Hassan Nasrallah, the Secretary General of Hezbollah, would declare a major war against Israel. However, in his speech, Nasrallah asserted that "the decision to launch an attack against Israel was 100 percent Palestinian." This statement led many to conclude that Hezbollah had no intentions of escalating the already existing skirmishes on the Lebanese-Israeli border.
It is important to note that the weakening of the dollar against major global currencies is not solely a result of regional tensions but also influenced by price fluctuations on the US stock exchange.
