The Israeli shekel has rebounded to its strongest position against the US dollar since the eruption of conflict with Hamas on October 7th.
Official rates from the country's central bank indicate that the Israeli currency's ongoing appreciation against the US dollar reached 3.728 shekels per USD on Friday, as per reports from Xinhua news agency.
Following the conflict's onset, the shekel had been on a downward trajectory. It started at around 3.863 shekels per dollar on October 7th and declined to 4.079 on October 26th, marking an 11-year low. However, this trend has notably reversed since then.
Yossi Frank, CEO of Energy Finance, a prominent Israeli financial risk management firm, explained to Xinhua that the market's perception shifted. Initially, there were concerns about the conflict escalating beyond Gaza, but the belief that the fighting would remain contained influenced the market positively.
Additionally, the recent upswing in the US stock markets, propelled by encouraging inflation data, prompted institutional entities in Israel to divest from dollars, consequently bolstering the shekel.
Frank highlighted October's high inflation rate in Israel as a factor that lessened the likelihood of the central bank raising the basic interest rate. This, too, contributed to the shekel's strengthening.
"In summary, most of the factors that previously contributed to the shekel's depreciation earlier in the year are no longer prevalent," Frank concluded.
(With Agency Inputs)