Shekel Surges to Highest Level in Years Against the Dollar

Israel’s currency continues to defy expectations, reaching one of its strongest levels in decades as the shekel traded at 3.0860 against the U.S. dollar on Thursday afternoon. The last time Israelis saw such a favorable rate was back in November 2021 and before that, 1996.

This sharp rise marks more than a fleeting moment. The shekel has been steadily appreciating against the nominal effective exchange rate a benchmark index measuring the shekel against the currencies of Israel’s key trading partners since April. At that time, the dollar stood at 3.88 shekels. The recent valuation reflects a surge of over 20% in just under a year.

Fueling this strong shekel trend are several core factors: a post-war economic rebound, robust defense exports, a rise in foreign venture capital targeting Israeli tech, and strategic currency hedging by institutional investors. Together, they’re pushing the Israeli currency to levels not seen in decades, creating a notable shift in the country’s economic landscape.

Beyond the U.S. dollar, Thursday’s official Bank of Israel exchange rates revealed strength across the board: 4.2563 shekels per British pound, 2.2765 per Canadian dollar, 2.1713 per Australian dollar, 0.1956 per South African rand, and 3.6873 per euro.

Market analysts suggest this trajectory isn’t done yet. There’s growing anticipation that the shekel could soon break the symbolic three-shekel-per-dollar barrier. Contributing to this outlook is the projected boost in foreign currency inflow from a pending Israeli natural gas deal with Egypt a move expected to inject more dollars into the economy.

Officials within Israel’s Ministry of Finance welcomed the shekel’s continued rise. “Import prices including raw materials for industry and a wide range of consumer goods are falling,” they said. “The strengthening of the shekel is greatly helping the economy and citizens after two years of war. We support this trend, and there is no reason to weaken the shekel at this time.”

Still, not everyone is celebrating. Exporters, who rely on favorable exchange rates to remain competitive abroad, have been pressuring the Bank of Israel to step in and stabilize the dollar. However, with foreign exchange reserves now exceeding $220 billion, the central bank appears in no rush to intervene.

“We are closely monitoring developments in the foreign exchange market,” said Bank of Israel Governor Prof. Amir Yaron, “and if necessary, we will make decisions accordingly.”

The strengthening shekel not only signals Israel’s economic stability in the face of global uncertainty but also highlights the enduring confidence investors and markets have in the country’s future.

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