$8.2 billion in hard currency spent from Israeli Forex reserves to boost Shekel
ALBAWABA – Israeli forex reserves dropped more than seven billion dollars since the surprise Gaza attack on October 7, as the central bank attempts to boost the occupation’s rocket-struck shekel, news agencies reported Tuesday.
The central bank has spent more than $7.3 billion in October alone to shore up the Israeli shekel in the wake of the surprise Gaza attack, according to Turkish news agency Anadolu.
In a Tuesday statement, the central bank said the country’s foreign reserves reached $191.2 billion in October, down from $198.55 billion in September.
The central bank announced a $45 billion support package after the conflict erupted, amid the ongoing Israeli onslaught on Gaza.
The central bank pledged to sell as much as $30 billion from its foreign-currency reserves and to provide as much as $15 billion via swaps, Bloomberg reported.
Despite the support, the shekel still plunged to its weakest level since 2012 last month and the cost of hedging against further losses soared, according to Bloomberg.
Authorities spent billions in the aftermath of the surprise Gaza attack to recuperate from the shock, which has cost billions in Israeli forex reserves, and spent much more on the current onslaught on Gaza. Troops are seen during operations in northern Gaza on November 7, 2023, amid continuing battles between Israel and the Palestinian militant group Hamas. (Handout Photo by Israel Army / AFP)
Late in October, the extra cost to protect against declines in November, versus hedging against gains, reached 1.7 percentage points on Friday, compared with about 1 point before the surprise Gaza attack.
Israeli stocks and bonds also fell heavily as traders feared the onslaught on Gaza would escalate to become a regional conflict.
Israeli losses mounted in the weeks since then, as the Tel Aviv stock exchange lost billions on day one of the surprise Gaza attack, among other damages still unknown. S&P Global also cut Israeli rating to AA- while other firms placed the occupation’s debt rating on review.
In the past 10 days, Bloomberg reported Israeli assets having gained amid global relief and signs that the onslaught in Gaza is not likely to start a regional war.
The shekel recouped almost all its losses, rising 0.9 percent to 3.85 per dollar, extending its rise since late October to 6%. Meanwhile, the central bank said the fall in Israeli forex reserves was mainly due to foreign-currency sales of $8.2 billion.
