BREAKING

Israeli economy continues to deteriorate as Al-Aqsa Flood proceeds

By Al Mayadeen English
Source: Israeli media
15 Oct 2023 15:49
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The Israeli stock market saw a 2.3% drop, mainly due to the deteriorating security situation after the launch of the Al-Aqsa Flood operation.

The "Tel Aviv Stock Exchange" building in "Tel Aviv," occupied Palestine in January 2011. (AFP)

The "Tel Aviv" stock exchange plunged by 2.3 percent on Sunday as a result of the deteriorating security situation the entity is witnessing following the start of the Al-Aqsa Flood operation on October 7.

During the past week, the exchange market fell by 7 percent as investors grew more concerned about the ongoing confrontations with the Resistance in Gaza and the continued targeting of "Tel Aviv," which is considered "Israel's financial capital."

Banks and the tech industry, both of which represent the largest portion of the Israeli economy, received a painful blow after international markets became more conservative in carrying out business with Israeli-based companies and firms.

Furthermore, a number of international companies, including American-based Chevron, have halted operations, while many foreign airlines announced suspending flights to the entity.

In an attempt to tackle the deteriorating situation, Israeli media reported that banks may consider raising interest rates if there is an upsurge in inflation subsequent to these events.

Earlier this week, and for the first time, the Bank of Israel announced plans to sell foreign currencies worth 30 billion dollars and provide dollar liquidity to local lenders. This measure followed a steep decline in the value of the Shekel.

However, the Shekel continued to fall despite the direct intervention - which is the first intervention in around two years, in addition to being the first time ever the central bank is selling dollars.

Financial experts expressed fear of further pressure on markets after analysts forecasted a long-lasting battle that will grow more severe. This event will lead to a more profound negative impact on the economy and government finances.

On the economic fallout of the ongoing operation, preliminary estimations last week projected a cost of around 4 billion Shekels to the entity's economy within a single week. Subsequent to these estimations, The Israeli Finance Minister, Bezalel Smotrich, acknowledged that severe repercussions are anticipated to hit the markets.