Israeli shekel jumps as investors sketch post-Iran conflict landscape

Israel’s shekel jumps sharply and stocks and bonds gain today as investors began to look beyond the escalating conflict with Iran and shape a more favorable long-term risk assessment for the country’s assets.

The shekel traded at 3.50 to the dollar by 1642 GMT, 3.6% stronger on the day and scoring its best performance since October 9, 2023, when the central bank heavily intervened to shore up the currency following the October 7, 2023 Hamas asault.

The Israeli currency had rallied as much as 4.6% earlier in the session, snapping a four-day losing streak and clawing back hefty losses suffered last week when rumors of an Israeli attack on Iran intensified. Israel launched its biggest-ever military strike against its longstanding enemy early on Friday.

The main Israeli share indices also gained, with the broad Tel Aviv 125 index TA125 closing 2.6% higher and extending Sunday’s gains of some 0.5%. The rise followed a weekend of punishing Israeli attacks on Iranian nuclear facilities, ballistic missile factories and military commanders, which were met with retaliatory Iranian strikes against Israel.

“The reaction of the local markets … perhaps reflects the assessment that in certain scenarios this war may be a catalyst for a new status quo in the region,” says Bank Hapoalim chief economist Victor Bahar.