As shekel gains, moneychangers run out of foreign currency

The combination of the US dollar’s slump against the shekel and weeks of war has led to an acute shortage of foreign currency at moneychangers in Israel. A “Globes” investigation into the matter found that the shortage has existed for several weeks, and is reflected in the complete absence of foreign banknotes for moneychangers who need much higher amounts than usual. Among the reasons: the demand for cheap foreign currency from a historical perspective, and flight disruptions that are affecting supply.

“They are charging ridiculous prices for euro or dollar banknotes, because there is simply no cash. There was no UK pounds at all,” one customer told “Globes.”

To understand the depth of the crisis, it is worth getting to know the operating mechanism of this market: Moneychangers have two main sources of supply for foreign cash. The first is the public – tourists, foreign workers and Israelis returning from abroad and converting banknotes they possess into shekels. The second source is the centralized purchase of foreign currency from commercial banks or other financial institutions. Some moneychangers also receive direct shipments of banknotes from overseas entities.

The bottom line is that if you were thinking about running to buy dollar or euro banknotes to take advantage of the low rates (NIS 2.8/$, NIS 3.27/€), you may find that the task is more complex than you thought.

“The heavy trading started about a month and a half ago, since we started seeing a dramatic drop in the shekel-dollar exchange rate,” explains a moneychanger. “There are no dollars, no euros, nothing. There is a shortage. The Bank of Israel is not releasing money to us. We have no work.”

Another moneychanger says in despair, “A million people are coming, because the rate is low, and there is nothing to give them.” Less than a kilometer away, at another moneychanger, the message is the same: “There are no dollars and no euros at all. It’s not just me, in other places, it’s been like this for the past month.”

Accusations against the Bank of Israel and the banks

The moneychangers also say that the high demand has led to the amounts requested for foreign exchange transactions swelling as the shekel appreciates and foreign currencies depreciate. One moneychanger says, “Now, since the dollar is low, people are buying large amounts $7,000-15,000 in a single purchase.”

The moneychangers themselves point an accusing finger at the Bank of Israel, which oversees the industry and commercial banks. Sources in the forex market explain that the problem stems, among other things, from a lack of flights as a result of the war and the prolonged closure of the skies, which has affected supply. “It is a technical problem that cargo planes have not been arriving in Israel for weeks. The planes are not bringing dollars, they said that the companies are no longer working with Israel,” said one of the moneychangers.

Shekel appreciation continues unchecked

Another explanation given for the shortage is a strategic policy of the banks, one of the moneychangers explains: “Almost everyone is short of dollars, the banks are not releasing them. This is a group that decides when they will give us dollars and when they will not. I don’t know what their aims are.”

On the other hand, there was a moneychanger who admits that although this makes it difficult for him to make a living, perhaps it is a justified economic policy in general: “I think there is a justification in why people have started buying a lot of dollars. I don’t know what they are thinking, maybe they think it will hurt the economy.”

“I buy expensively, I can’t lose.”

The direct result of the shortage in the field is price distortion: Despite the low representative rate, some moneychangers demand a high premium from customers and sell them foreign currency at rates significantly higher than the market rate. “I can get dollars, but the price is much higher,” explains one moneychanger. “The rate I can give today for the dollar is NIS 2.95/$, When was the dollar NIS 2.80/$? People haven’t seen anything like this. Everyone is in my situation. Normally the bank releases 100% of the quota for us, and now it gives maybe 15%. It hurts our work and drives away customers, because the price sounds too high to them. But I have no choice, I buy the cash expensively and can’t sell at a loss.”

Two other moneychangers described a similar situation, in which the lack of an alternative passes the costs onto the consumer. “I have dollars, I don’t have any euros at all. The bank has been turning off the tap for a month,” says another moneychanger. “I sell dollars at a rate of NIS 3/$. Crowds come and ask for foreign exchange because they see on the news that the rate is on the floor, but they don’t understand that there are no bills. I bought the current stock at a rate of NIS 3.05/$ just before the crash, and normally I would sell at NIS 2.85/$.”

Another moneychanger in the same area sums up the distorted picture of the situation: “There are no bills in the country, so the price is going up. Anyone who wants a dollar or a euro will not get them at the official rate of NIS 2.80/$, but at NIS 2.90/$ and above.”

Dr. Nadine Bodo-Trachtenberg, deputy chair of Esh digital bank and former deputy governor of the Bank of Israel, explains that this is not a strategy of market direction on the part of the central bank. “The large transactions that affect the dollar exchange rate do not go through moneychangers,” she tells Globes.

She adds, “The capital movements in the forex market are huge and amount to billions of dollars, which is simply not the order of magnitude of the moneychangers. I don’t know what the Bank of Israel is doing on this specific issue, but the trading volumes in the general forex market are enormous. The ones who really move the market are the institutional investors, the importers and exporters. These are transactions worth billions, and not the small activity by the moneychangers.”

Another blow to moneychangers

The current situation comes with another blow that moneychangers have recently suffered. At the end of April, the Knesset approved, as part of the Arrangements Law, the cancellation of the exemption of moneychangers from the Law on Reducing the Use of Cash, a move intended to reduce the limit that has been breached in this market. Until now, it was possible to cash checks at money changers in any amount without limit, and withdraw cash in huge amounts in return. The amendment to the law now establishes a “restriction on exchanging a bill for cash” so that an individual will not be able to cash a check if the amount of the check is over NIS 6,000, and a business will be able to cash checks up to NIS 25,000 only. Those violating the law will be subject to financial sanctions depending on the amount of the violation, ranging from 15% to 30% – imposed on both parties to the transaction.”

Bank of Israel: No known shortages

The Bank of Israel responded: “Those who provide foreign currency cash to currency exchange service providers (moneychangers) are the commercial banks and not the Bank of Israel. The Bank of Israel is not aware of any shortages of foreign currency cash, and to the extent that there is difficulty in obtaining cash, it appears that this is a localized difficulty.”

Published by Globes, Israel business news – en.globes.co.il – on June 1, 2026.

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