The Bank of Israel returned to the foreign exchange market on Monday, conducting another round of intervention aimed at curbing excessive volatility in the shekel. The move marks the central bank’s latest effort to manage currency fluctuations that have intensified amid ongoing geopolitical tensions and shifting global interest rate expectations.
According to market participants, the central bank sold foreign currency reserves—likely U.S. dollars—to support the shekel after it weakened past key technical thresholds. The intervention follows a similar operation last month and signals policymakers’ readiness to act when disorderly market conditions threaten financial stability.
While the Bank of Israel maintains a floating exchange rate regime, it has long reserved the right to intervene during periods of abnormal volatility. Governor Amir Yaron has previously emphasized that such actions are not intended to target a specific rate but to ensure market functioning and prevent overshooting driven by speculative flows.
The shekel has faced pressure in recent weeks from a combination of domestic political uncertainty, elevated risk premiums, and a broadly stronger dollar. Analysts suggest further intervention remains probable if depreciation accelerates, though the central bank’s ample reserves—exceeding $200 billion—provide substantial firepower.
Markets will now watch for any accompanying policy signals, particularly regarding the interest rate path, as the Bank of Israel navigates the dual mandate of price stability and supporting economic activity amid a challenging environment.