It’s lost more than 3% in the past week as tensions escalate, even as volatility is on the wane after the Bank of Israel unveiled a $45 billion package of measures to smooth out fluctuations in the exchange rate.

The standoff in the market arrived at a fraught moment for Israel, with Iran’s top diplomat saying an expansion of the war was becoming “inevitable.” Strategists at Citigroup Inc. initiated a bearish wager against the shekel on Monday, saying that the conflict appeared to be “entering a new phase.”

“In Israel, we expect the shekel will likely continue to underperform due to the current uncertainty, even if the pace of potential depreciation is capped by the Bank of Israel,” Citigroup’s strategists, Luis Costa and Bhumika Gupta, wrote in a note.

The nation’s dollar bonds extended losses, with the yield on the security due 2030 jumping 17 basis points to 5.9%. Meanwhile, stocks rebounded, with the benchmark TA-35 Index climbing 2.5% after falling into a bear market on Sunday.

Israel has urged civilians in Gaza to move to the south of the territory from the north, where it’s concentrating the bulk of its military activities.

‘Much Healthier’

Still, in the view of Goldman Sachs Group Inc. strategists, the shekel is unlikely to significantly depreciate further. They said Israel has plenty of reserves to cushion the currency and said the balance of payments, a broad measure of a country’s trade in goods and services, is “much healthier” than past episodes of conflict.

Read More: Israel Latest: Biden Considers Israel Trip in Bid to Contain War

In previous clashes in the region, there were also “significant financial inflows from abroad,” in the form of aid and other financial transfers that helped support the shekel, they added.

Recent moves in the Israeli exchange rate suggest the central bank has been active selling dollars, according to Bank Hapoalim. “The prevailing assessment in the market is that foreigners were involved in the sale of shekels,” said analysts at the Tel Aviv-based bank.

Read More: Israel Hopes It Will Avoid Rating Cut on War, At Least for Now

Options traders see only about a 20% probability of the shekel weakening past 4.1 against the dollar by year-end, a level that the central bank had appeared to defend in 2012.

“The strong financial strength of the economy enabled the Bank of Israel to create a kind of firewall that succeeded in separating — in part — the negative impact on the real economy from the financial markets,” Bank Hapoalim said.

Israel’s Finance Ministry said Monday it sold 2 billion shekels ($500 million) of debt as part of a routine debt offering. Investors, including foreign and local banks, demanded more than five times the amount of securities on offer. The government also sold 20 billion yen ($134 million) of three-year bonds to a private strategic investor.

As part of a support campaign for Israel in the US, bond underwriters helped to raise more than $200 million, with most of the money coming from states, institutions and local authorities from Pennsylvania to New York and Texas.