Renewed direct military confrontation between Iran and Israel triggered sharp swings in Israel's foreign exchange market Monday, sending the dollar and euro higher against the shekel while oil prices climbed on fears of wider regional instability.
The U.S. dollar traded at about 2.96 shekels Monday morning, up six agorot from its official rate at the end of last week and roughly 16 agorot above its level at the end of May.
The euro rose to about 3.41 shekels, after its official rate was set at 3.38 on Friday. The European currency had traded near 3.16 shekels on May 24, marking a gain of about 25 agorot in just over two weeks.
Oil prices also rose. Brent crude climbed about 3% to around $96 a barrel, while U.S. West Texas Intermediate crude traded near $93 a barrel.
The market moves reversed months of strong gains by the Israeli currency. The shekel had appreciated sharply against both the dollar and euro in recent months, squeezing exporters and technology companies and contributing to layoffs in some sectors.
The volatility came a day after the Bank of Israel acknowledged that it had intervened in the foreign exchange market in May, purchasing $801 million in what marked its first such move since the COVID-19 pandemic.
A senior Bank of Israel official told ynet that the intervention was not intended to weaken or strengthen the shekel, as previous interventions had been, but rather to address what the bank described as irregular activity in the foreign exchange market.
The central bank avoided explicitly referring to speculation, although foreign exchange experts said the wording suggested that unusual trading activity had prompted the rare intervention.
Brokers have also claimed that the Bank of Israel intervened again last Friday, helping push the dollar above 2.90 shekels after it had traded below 2.80 earlier in the week.
The Bank of Israel declined to comment on those reports, saying it does not disclose its foreign exchange operations outside the monthly reports it publishes at the beginning of each month.