Israel's shekel was largely flat against the dollar on Wednesday, but its bonds edged slightly higher, after US President Donald Trump said his country would like to take over the Gaza Strip.
The shekel was trading at 3.56 versus the dollar, a change of 0.06% from Tuesday's close by 0822 GMT. Israeli and Lebanese sovereign bonds were flat to higher, while those of Jordan and Egypt were flat to lower.
"Markets are treating Trump's announced intention to take over the Gaza Strip and evacuate Palestinians to neighboring countries with skepticism," said Francesco Pesole, an FX strategist with ING, adding that Trump's comments that the US could deploy troops were "risk-off, oil-positive and dollar-positive, as Arab nations should firmly oppose the move."
Israel's economy has largely weathered the war, while Lebanon's defaulted dollar bonds returned around 100% last year as investors anticipated the Middle East conflict weakening armed group Hezbollah.
Trump's plans for Gaza
This comes after Trump announced the US plans to take over the Gaza Strip for the foreseeable future, during a shocking joint press conference with Prime Minister Benjamin Netanyahu following their hour-long Oval Office meeting on Tuesday.
He said by taking over Gaza the US will create economic development that will supply an "unlimited number of jobs and housing for the people of the area."
Trump said he sees taking over Gaza as a way to bring stability not only to Israel's neighbors but potentially the entire Middle East.
Hannah Sarisohn contributed to this report.