By Steven Scheer
JERUSALEM Nov 14 Israel's shekel slid
more than one percent to a two-month low against the dollar on
Wednesday after Israel killed the military commander of militant
group Hamas in an airstrike that investors fear could trigger a
new wave of violence.
"It caught the market sleeping," said Dan Biro, a dealer at
Israel Discount Bank, of Israel's action which came in response
to more than 100 missiles fired out of the Gaza strip the past
few days. "It's a very big kill."
Islamist Hamas said Ahmed Al-Jaabari, who ran the
organisation's armed wing, Izz el-Deen Al-Qassam, died along
with a passenger after their car was targeted by an Israeli
missile. Israel warned of more strikes while Hamas and other
militant groups have vowed a strong response.
Israel's Shin Bet domestic intelligence service confirmed it
had carried out the attack, saying it had killed Jaabari because
of his "decade-long terrorist activity".
Israeli markets typically shrug off Israeli-Palestinian
violence, but dealers said investors fear Hamas may have
longer-range missiles than in the past that could wreak havoc on
Biro said the market had expected some sort of Israeli
reprisal for its rocket barrage but "not this massive".
Trading had been quiet for most of the session, with the
shekel fixed at 3.918 - a 0.3 percent appreciation from Tuesday.
But around 4 pm local time (1400 GMT), Israel's military started
launching a series of missiles strikes across Gaza, killing nine
Palestinians and sparking a dollar-buying frenzy from locals and
The dollar stood at 3.9625 at 1621 GMT.
"There is no resistance at all," Biro said, adding that
dollar buying included spot, options and forwards. "We weren't
seeing a lot of buyers until" the Gaza strike.
The violence also sent key stock indices
down between 0.5 and 0.9 percent. Government bond prices
fell as much as 0.5 percent.
Since the beginning of the month, the shekel had stuck to a
narrow range of 3.87-3.92 to the dollar. It had appreciated from
4.04 in late August to 3.80 by mid-October, partly prompting a
surprise Bank of Israel rate cut on Oct. 26 to 2 percent from
The central bank is opposed to a strong shekel since it
harms exports, which account for more than 40 percent of
Israel's economic activity.