(Bloomberg) -- Israel’s central bank brought its unprecedented currency interventions to an almost complete halt in November, as the shekel rebounded in tandem with the rally in US stocks while the war against Hamas stays relatively contained.

The Bank of Israel said Thursday that it sold just $338 million in foreign exchange last month, a sharp drop from the $8.2 billion it used to defend the local currency in October. The shift in sentiment has taken some pressure off its reserves, which grew by nearly $7 billion last month to over $198 billion, largely as a result of a currency revaluation.

The shekel gained more than 8% against the dollar in November, making it the best performer among a basket of 31 major currencies tracked by Bloomberg. It appreciated about 0.3% on Thursday, near its strongest level since August.

The financial defenses erected by the Bank of Israel have withstood a selloff that began after the conflict erupted on Oct. 7, with policymakers still waiting for markets to stabilize and refraining from interest-rate cuts. 

In the immediate aftermath of the attack from Gaza that killed 1,200 people, authorities deployed a massive support package that included a pledge to sell as much as $30 billion of reserves and provide up to $15 billion via swaps.

That commitment, “combined with the measured war scenarios published later by the central bank and the Finance Ministry, had a calming effect on the shekel,” said Ronen Menachem, chief markets economist at Mizrahi Tefahot Bank.

While the shekel’s declines first began months ago with the government’s push to reduce the power of the courts, the shock of the conflict briefly accelerated its depreciation.

The response by the central bank — which has been selling foreign exchange for the first time since it allowed the shekel to trade freely — helped reverse a plunge of almost 6% in October that took the Israeli currency to an 11-year low against the dollar.

But Mizrahi Tefahot’s Menachem also cautioned that the shekel is still quite volatile. Its fortunes could sour again “if — and to the extent that — the government’s fiscal policy will deviate from the fiscal framework and rules recommended by the Bank of Israel, and considering the uncertainties of war,” he said.

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