In the month since Hamas attacked civilians in southern Israel and the Israeli government invaded the Gaza Strip in response, foreign investors have faced complicated decisions about how to manage their exposure to the Jewish state.
While financial markets have remained relatively stable since the outbreak of war last month — with many traders waiting to see if the situation sparked a wider regional conflict affecting energy prices — foreign investors have had a taste of how unstable the economic environment is likely to be for the duration of the war.
The value of the Israeli shekel lost about 5% against the dollar in the immediate aftermath, although it has since strengthened with support from the Bank of Israel.
Foreign investors are also bracing for higher inflation in Israel, following the central bank’s plans to extend 10 billion shekels ($2.6 billion) of cheap credit to help small businesses survive the war, which has already dented the prospects for industries such as tourism.
