Shekel strengthens, markets rally as Israel-Hamas ceasefire sparks optimism
Dollar and euro fall as Tel Aviv indices climb in response to first-phase agreement between Israel and Hamas.
The market’s first reaction to the news that Israel and Hamas have signed the first phase of his peace plan to end the war in the Gaza Strip came in the foreign exchange market, with a strong rise in the shekel. Later, the Tel Aviv Stock Exchange also responded positively.
The dollar fell by 0.6% and is trading at 3.26 shekels, its lowest level in more than three years. The euro dropped 1% to 3.77 shekels.
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The Tel Aviv Stock Exchange climbed following news that Israel and Hamas have signed the first phase of his peace plan to end the war in the Gaza Strip
(Photos: Kobi Wolf/Bloomberg, REUTERS/Ronen Zvulun, MAYA LEVIN/AFP)
The ceasefire lifted the TA-35 index by 2.3%, the TA-125 by 2.9%, and the TA-90 by 4.6% - all three closing at record highs.
The construction index soared 9.1%, while the risk level fell sharply: the yield on 10-year Israeli government bonds declined by 8 basis points to 3.958%.
U.S. President Donald Trump announced early Thursday that Israel and Hamas have signed the first phase of his peace plan to end the war in the Gaza Strip. Prime Minister Benjamin Netanyahu said shortly afterward, “With God’s help, we’re bringing everyone home.” “I am very proud to announce that Israel and Hamas have both signed off on the first phase of our Peace Plan,” Trump wrote on Truth Social. “This means that all of the hostages will be released very soon, and Israel will withdraw its troops to an agreed-upon line as the first steps toward a strong, durable, and everlasting peace.”
An announcement about preparations for implementing the agreement was also issued this morning by the IDF Spokesperson’s Office. Trump stated that the hostages will be released by Monday and that he may arrive on Sunday to give a speech in the Knesset.
“The shekel exchange rate is a barometer for the level of risk in the capital market,” said Ori Tuval, CEO of Tuval Investment House and chairman of the hedge fund Allamanda Capital. “If we see a comprehensive deal in the future that leads to an agreement in the Middle East with Saudi Arabia and other Arab countries, we could see the dollar exchange rate fall toward 3 shekels or even lower. A lower dollar rate reduces inflation and will help the Governor of the Bank of Israel lower interest rates more quickly.”
