The shekel was last down more than 3% against the dollar at 3.9581, Reuters reported.
On Saturday morning, the Palestinian fighters launched a hybrid surprise operation outside Gaza after Israeli settlers stormed the Al-Aqsa Mosque compound in recent days and a record number of Palestinians were killed by Israel in recent months.
The Zionist regime has responded by pounding the besieged Gaza Strip after formally declaring war against the Palestinian Hamas group. Its military says some 100,000 reserve troops have amassed near Gaza.
The latest death toll stands at 413 Palestinians, according to health officials, and more than 700 Israelis, according to media reports.