Israel's Shekel and Market Surge Amid Conflict with Iran

Israel's shekel surged by 4.5% against the dollar, as investors raised their risk assessment amidst escalating conflict with Iran. Stocks and bonds also gained, with the Tel Aviv 125 index up nearly 2%. This follows Israel's major military strikes on Iran and tensions in the region notably rising.

In a remarkable financial shift, Israel's shekel soared over 4.5% against the U.S. dollar on Monday, marking its most substantial daily increase since 2008. This was as investors reevaluated their risk assessments in light of the country's escalating conflict with Iran.

The main Israeli share indices rallied, with the Tel Aviv 125 index climbing 1.9% in the afternoon, continuing Sunday's upward trend. This financial upswing followed a weekend filled with Israeli offensives against Iranian targets and retaliatory strikes from Iran. Bank Hapoalim's Chief Economist Victor Bahar noted that the market's reaction may indicate an expectation of a new regional status quo.

Despite the military operations, Israeli officials have signaled that the conflict will endure until the perceived nuclear threat from Iran is neutralized. While Tehran denies pursuing nuclear weapons, the geopolitical tension remains high. The financial markets reflected this ongoing uncertainty, as both bonds and credit default swaps saw gains, yet have not completely recovered from recent losses.

(With inputs from agencies.)