October saw $4.3Bln decrease in 'Israel's' forex reserves
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Since the onset of the war in October 2023, the Bank of Israel has only sold less than a third of the promised amount, with most sales occurring during the initial months of the war.
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Demonstrators walk with Israeli flags next to a banner showing Prime Minister Benjamin Netanyahu during a protest against plans to overhaul the judicial system in Tel Aviv, occupied Palestine, Saturday, March 25, 2023. (AP)
Israeli news website Globes on Thursday reported that "Israel's" foreign exchange reserves dropped to $216.074 billion by the end of October 2024, marking a decrease of $4.303 billion from September's record high, according to data released by the Bank of Israel.
This decrease in reserves represents about 42% of the occupation's GDP.
The decline primarily resulted from a revaluation that reduced the reserves by approximately $4.922 billion, which was partly offset by the occupation's foreign exchange transactions, totaling around $668 million.
Despite an earlier pledge by the Bank of Israel to sell up to $30 billion in foreign currency to stabilize the shekel amid the ongoing wars on Gaza and Lebanon, the central bank refrained from making any currency sales in October 2024.
Since the onset of the war in October 2023, the Bank of Israel has only sold $8.5 billion of the promised amount, with most sales occurring during its initial months.
Globes noted that "Israel's" substantial foreign exchange reserves could serve as a crucial financial buffer if the regional geopolitical situation worsens, potentially affecting the shekel's strength.
Economic analysts note that these reserves were instrumental in providing stability to "Israel's" economy, particularly amid heightened uncertainty and market volatility.
Read more: Israeli shekel; one of the world’s worst performers since August
This reduction in reserves comes amid a period of growing international scrutiny and economic pressure on "Israel."
As reported by Reuters, several major European financial institutions, including Italy's UniCredit and French insurer AXA, have begun scaling back investments and cutting ties with Israeli companies, citing ethical concerns over "Israel's" military actions in Gaza and violations of human rights in the occupied Palestinian territories.
Governments are increasingly taking positions on the war. Norway, Ireland, and Spain have recognized Palestinian statehood, while French President Emmanuel Macron has advocated for an arms export halt, and the UK has suspended certain arms licenses to "Israel".
Capital flight out of control
An analysis by Israeli business daily Calcalist in October reveals a 62% surge in capital flight from "Israel" since October 7, 2023, driven by political and economic uncertainty following the formation of an extremist government led by Prime Minister Netanyahu, Bezalel Smotrich, and Itamar Ben-Gvir.
The report notes a stark shift in financial outflows, with a $21 billion net outflow in the third quarter of 2023, contrasting sharply with the previous $1.25 billion surplus.
In addition to the financial flight, the report outlines other concerning trends, including a decline in foreign direct investment (FDI) and a sharp rise in credit default swaps (CDS), which have quadrupled since the start of the war.
The widening interest rate gaps between Israeli and US bonds are also seen as an indicator of increasing risks, as foreign investors offload government bonds, signaling a loss of faith in the regime's financial future.
