Israel’s central bank divests $30 billion in foreign reserves as the shekel experiences a seven-year low.
On Monday, the Bank of Israel made an announcement regarding its intention to divest up to $30 billion in foreign reserves, aiming to bolster its domestic currency, which has seen a significant decline following the recent incursion by Hamas militants over the weekend.
The Israeli shekel experienced a 1.63% depreciation, trading at 3.90 against the US dollar, marking its lowest point in seven years.
In a statement released on Monday, the central bank stated, “The Bank will actively participate in the market in the upcoming period to mitigate fluctuations in the shekel exchange rate and ensure the necessary liquidity for the continued smooth operation of the financial markets.”
Additionally, the bank disclosed its plan to infuse liquidity into the market through SWAP mechanisms, with an allocation of up to $15 billion.
The Bank of Israel will continue monitoring developments, tracking all the markets, and acting with the tools available to it as necessary
The Israeli currency is expected to experience a slight devaluation, as both Israelis and foreigners are anticipated to reduce their exposure to Israel due to the increasing economic risks,” commented Eckstein, who currently holds the position of emeritus professor of economics at Tel Aviv University.
During the early hours of Saturday, coinciding with a significant Jewish holiday, the Palestinian militant group Hamas initiated a multifaceted incursion into Israel, utilizing land, sea, and paragliders for airborne infiltration. This attack occurred shortly after a barrage of thousands of rockets were launched from Gaza into Israel.
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