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Panic hit the currency dealing rooms of the big banks as the terrorist attacks in the U.S. began to hit one after another at Tuesday 16:00 local time (9 AM in New York). The shekel collapsed against the dollar and later, against the basket of currencies.

The shekel had begun to devalue Tuesday morning. As news of the attack on the Twin Towers in New York arrived, the shekel began to implode, quickly dropping to NIS 4.41 to the dollar.

By 18:00 local time the shekel had rallied slightly to NIS 4.39, after a spate of dollar sales.

Altogether the shekel has devalued by about 2% today, bringing it to an all-time low against the dollar.

Dealers don't want to even speculate about what the following days will bring. "We've never encountered a situation like this," said one.

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Trade is irregular and many of the usual players ? U.S., London and other foreign banks ? are out for the count. The American finance world has shut down after the catastrophe in Manhattan, and the decision to keep U.S. stock exchanges closed today. London City also evacuated offices, to be on the safe side.

During periods of terrible uncertainty, currency dealers usually hunker down in safe currencies and assets, such as the dollar. But given that today's attacks focused on the States, dealers are haring for coins such as the Swiss franc.

Another favorite is gold, which has been climbing sharply. Fears of another energy crunch if the situation spirals into war are fueling a sharp increase in crude prices too. Not to mention that the oil exchange was headquartered in Manhattan's Twin Towers, which collapsed today after two hijacked passenger planes slammed into them.

Meanwhile, to protect themselves, the banks have opened wide spreads between bid and ask prices to customers. The wide spreads are probably going to stay until the situation stabilizes.

The wave of terrorism to strike the U.S. found the shekel-dollar trade in very delicate shape. The shekel had been weakening rapidly in any case because of Israel's eroding economic situation. Its devaluation may have been exacerbated by the Finance Minister's statement that there is no need to intervene in trade or raise interest rates.

It was obvious that even a minor event, let alone the worst terrorism in the history of world, would send the locals racing for dollars. The surprise is that the dollar-shekel rate stopped, for the moment, at only NIS 4.40.