Joseph Adinolfi is a markets reporter at MarketWatch.
The Israeli new shekel touched its weakest level against the U.S. dollar in more than eight years on Monday as investors fretted about the potential economic blowback of a prolonged conflict with Hamas.
This time around, the pressure appeared to come from concerns that Israel’s economy could suffer from the mass mobilization required of the war, as well as concerns about the potential for a broader conflict that could draw in other nations like Iran. “Israel’s economy has proven resilient to conflicts in the past and been able to adapt over time, which has often limited the direct impact on the economy. But a much larger and longer-lasting war this time risks larger spillovers to the labor market and economy,” said Nicholas Farr, emerging Europe economist at Capital Economics.
“…he Bank of Israel’s FX intervention of up to $30 billion seems to have done enough to put a floor under the shekel and prevent financial contagion. The BOI is well placed to defend the shekel as it is sitting on large FX reserves equivalent to around $200bn .”
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