The Bank of Israel has said it will sell up to $30bn of foreign currency in the open market to maintain the stability of the shekel during Israel's war with Hamas in the Gaza Strip.
The announcement, which was made on Monday, is the central bank's first ever sale of foreign exchange.
It comes as the shekel has weakened sharply against the dollar in recent months, due to a combination of factors including the ongoing war in Ukraine, rising inflation, and political uncertainty in Israel.
The central bank said in a statement that it will operate in the market during the coming period in order to moderate volatility in the shekel exchange rate and to provide the necessary liquidity for the continued proper functioning of the markets.
It said it would provide liquidity in the market of up to $15bn through SWAP mechanisms, a derivative contract in which one party swaps the cash flows or value of one asset for another.
The central bank said it would continue monitoring developments, tracking all the markets, and acting with the tools available to it as necessary.
The shekel had weakened by more than 2% to a near-eight-year low of 3.92 per dollar ahead of the announcement. The shekel early on Monday recovered to 3.86 per dollar, down 0.6%.
The shekel had already been down 10% against the dollar so far in 2023, largely due to a bid by the Israeli government to overhaul the judiciary.
Israeli stock and bond prices on Sunday slid 7% while many businesses were closed after the Hamas attack.
Israel has amassed forex reserves of more than $200bn, much of it from buying forex since 2008 to try to keep the shekel from strengthening too much and hurting exporters.
The last time the bank intervened was in January 2022.
Fighting in Israel and Gaza continued into a third day on Monday with authorities reporting the deaths of at least 560 Palestinians.
