LONDON, Oct 10 (Reuters) – Israel’s shekel hit its weakest level since early 2016 and the cost of insuring the country’s sovereign debt against default soared on Tuesday after a bloody weekend assault by Hamas militants put Israel on a war footing.

The shekel softened 0.4% in early trade to hit 3.9544 to the dollar, extending losses again after Monday’s more than 2.5% tumble, which was the biggest one-day move since March 2020. The currency has weakened 11% so far in 2023.

Five-year credit default swaps, which pay the owner in the event of an bond issuer defaulting, have risen to 93 basis, well above Friday’s close at 60 bps, according to data from S&P Global Market Intelligence.

The weekend attack and retaliatory strikes by Israel have claimed more than 1,500 lives, raising fears the region could face a prolonged wave of conflict and violence.

Stocks, bonds and currencies of Israel and neighbouring countries such as Lebanon, Jordan and Egypt have come under severe pressure in recent days. The Bank of Israel announced on Monday it would sell up to $30 billion of foreign currency in the open market to stabilise the currency.

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