Shekel at 4-year strongest against US dollar

The shekel is gaining in afternoon inter-bank trading against the US dollar and is trading at levels not seen since the start of 2022. The shekel is 0.28% lower against the dollar at NIS 3.19/$, and 0.22% higher against the euro at NIS 3.761/€.

Yesterday, the Bank of Israel set the representative shekel-dollar rate 0.062% lower from Friday, at NIS 3.206/$, and the representative shekel-euro rate was set 0.165% higher, at NIS 3.764/€.

As the shekel appreciates, when might the BoI intervene?

Since the beginning of the year, the shekel has strengthened by 12% against the dollar. Since October 2024, when Israel targeted Hezbollah’s leaders with the pager operation, which was an important turning point in the exchange rate, the shekel has strengthened by over 14% against the US dollar.

Meitav chief economist Alex Zabezhinsky says, “The announcements of gas sales to Egypt and large arms deals are working to strengthen the shekel.

The recent gains on Wall Street are also having a positive effect on the shekel. The Nasdaq has climbed over 20% since the beginning of the year, and Israeli institutional investors exposed to investments abroad are selling dollars to balance their exposure.

Zabezhinsky notes, “If there are declines on the world’s stock markets, this will be the main economic threat to the strengthening of the shekel.”

In general, the strengthening of the shekel stems from several main factors: a sharp increase in foreign investments in the Israeli capital market, a decrease in Israel’s geopolitical risk premium (especially following the war with Iran and the declaration of a ceasefire in Gaza), a jump in the Israeli stock market indices, and sharp growth in GDP in the third quarter.

At the same time, the dollar has weakened globally, partly due to the trade wars initiated by the Trump administration. Ofer Klein, head of the economics and research department at Harel Insurance and Finance, notes that both from expectations derived from the capital market and the company’s forecast say that the shekel exchange rate will be NIS 3.2/$ in six months – unchanged from today. Bank Hapoalim expects an increase in inflation in the next 12 months, with one of the reasons being, “the gradual exhaustion of the shekel’s strengthening.”

Published by Globes, Israel business news – en.globes.co.il – on December 23, 2025.

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