The Israeli shekel's value rose against the euro and the dollar on Monday following reports of headway toward a cease-fire with Hamas, correcting some of the losses the Israeli currency incurred over the weekend.
The shekel has experienced a robust rally, buoyed by a resurgence of optimism that has mitigated the recent pessimism about regional peace prospects. This upbeat sentiment, combined with reduced trading volumes during the holiday season, has significantly bolstered the shekel's position.
In Monday's continuous trading, the shekel appreciated by a solid 1.3% against the dollar, advancing from last Friday's indicative rate of 3.818 to approximately 3.758 shekels. Similarly, the euro declined from its previous indicative rate of 4.104 shekels to about 4.03 shekels, registering a notable 1.85% decrease in just a few trading hours.
Analysts suggest that a successful outcome from the current peace talks—resulting in a lasting cease-fire in the Gaza Strip and potentially along the Lebanese border—could further depress the dollar exchange rate. However, this optimism might be fleeting if the negotiations falter, potentially causing a protracted stall in the peace process and a weakening of the shekel.
Currency experts also attribute the recent volatility in the shekel exchange rate to reduced trading volumes during the holiday season, which tend to exaggerate market fluctuations. As trading resumes post-holidays, investment houses anticipate a positive uptick in the stock market.