As shekel gains strongly, is it heading for NIS 3/$?

In the wake of the ceasefire in Israel with Iran, the strong appreciation of Sheika continues. In the afternoon, the Shekel-Dollar rate decreased by 1.33 % at 3.398/$ and the Shekel-Euro rate fell 1.05 % at 3.94/€ NIS. Shekel has strengthened approximately 5 % against the US dollar since the beginning of the month and has been trading in its strongest level since the end of 2022. Since the beginning of the month, shekel has strengthened 3.6 % and 5.4 % against the euro and sterling, respectively.

The Shekel’s strengthening against the dollar comes at a time when the American currency recovers a little against the world’s major currencies, after it decreased about 9 % since the beginning of 2025. In fact, last month, the dollar was placed against only 4 currencies, along with Shekel, which recorded the most important estimate – the euro and the euro from Russia, Denmary and Swizarand.

Why do you rise to a shekel against the dollar?

The decrease in the risk premium in Israel after the operation in Iran is behind the latter’s shekel. Military successes last week, which are strengthened by the American attack on nuclear sites in Iran, led to optimism between investors, which were also reflected in the increases on the Tel Aviv Stock Exchange, and the strengthening of a shekel and a decrease in government bond returns, (which reflects in the risks that investors make).

“In the period leading up to the attack, and at its beginning, when its results were not yet clear, we saw the increase in the risk premium in Israel. This was also reflected in the Forex market, as the brand began to prices in the middle of the east, where it started in the middle of the east in the east, in the middle of the east. It was removed, and the geopolitical situation is improving,” says Moody Shafer, a bank strategy expert in the bank.

Along with a decrease in risk premium, there are also those who refer to the flexibility on the internal front, not only in recent events but throughout the war, as another factor in supporting the increases in the markets and the exchange rate of the shekel against the dollar.

“The flexibility, the ability to adapt and control the self -learned investors in Israel have learned nearly two years of geopolitical tensions and wars in the markets last week,” says Copby Levy, a strategic expert on the market at Layoumi Bank.

Could the Shekel-Dollar rate decrease less than 3/$

In the future, analysts say that in addition to the expected decline in the Israeli risk premium, the structural factors in the Israeli economy will continue to support the strengthening of Shekel. Consequently, among other things, they point out the current account surplus, bias the economy towards exports, and foreign investment in Israel in industries such as high -tech.

These factors raise the issue of whether shekel can be less than the NIS 3/$ sign – something unprecedented. “In the long term, the coming years – I think so, but we are not close to there now,” Shafer notes. Levy is more careful. “In general, the dollar can decrease from $ 3/$ NIS, but in such an unconfirmed environment, it is impossible to estimate it.”

Levy recalls that in 2021, the dollar approached the NIS 3/$, but he confirms that at that time “an event was mainly stemming from the weakness of the dollar. We saw a strong shekel at the time, due to technical activity, which flourished in the post -period period, and because of the foreign flow flowing to a recovery. The market, in terms of interest rates and currency purchase.

Who are the players working in the Forex market?

There are quite a few dominant players in the Forex Market in Israel: foreign investors, speculators, and most of all, according to estimates, are the founders of institutional investors – the bodies that manage the investments of the Israeli public, such as the role of investment and insurance companies. Similar to what happened in Tase, the main players led the institutions, optimistic about the decline in the risk premium in Israel and their exposure to it, including in the Forex market. In this context, the increase in the purchase of Israeli stocks and other assets in the country also appears to be supported by the reduction of the Forex surplus, which also contributed to a shekel.

Besides the investors themselves, there are quite a few forces that affect the Sheekl-Dollar exchange rate, such as the interest rate teams between Israel and the world. The fact that the interest rate in Israel is 4.5 %, one of the highest rates in the world at the present time, plays for the local currency.

The stock market also affects a shekel, and is famous for its high association with the developments in Wall Street, especially on the Nasdaq Stock Exchange. With the high -tech index in the United States, it strengthens Shekel against the dollar. The reason for this lies again with institutional investors. This is limited in its exposure to the foreign exchange, and therefore when the value of its assets increases in the main Wall Street shares, they have to balance the increase in the dollar component by increasing its exposure to the shekel, which enhances the local currency.

Will the Shekel strengthen the low interest rate?

But is shekeling necessarily good news for the Israeli economy? Bigly, yes. “The strong shekel is an indication of a strong economy,” explains. “Moreover, it is also good that it adjusts the inflationary pressures here. Enhancing the shekel is a necessary condition for the current bank to decide to reduce the interest rate, because it also contains a decrease in the risk premium, which the Bank of Israel wants to see, and will also adjust inflation.”

However, Levy and Shaftir agree that it is too early to estimate when the Bank of Israel will reduce the interest rate. “I don’t think the change in Shekel’s value now will have an effect on the interest rate,” Levi believes. “As long as this uncertainty continues, I appreciate that the Bank of Israel will keep the interest rate stable. This war can really end, then in the coming months, there will be at least one reduction in the interest rate.”

Who are the big losers?

But not everyone benefits from a strong shekel. For a few Israelis, this is less than good news. Any person whose income is in foreign currency, whether in stocks, indicators or real assets, loses the strengthening of the Israeli currency, such as exporters or many double currency companies (which are traded in Wall Street and Israel).

Even those who decided to increase the exposure of an investment portfolio to foreign stock indicators or bonds denominated in dollars (or in other currencies that are strengthened against Shekel), they lose the shekel. Consequently, anyone who is betting on the pioneering US index, S&P 500, will have to abandon part of its revenues when converting the assets in dollars into a shekel. The United States Index attracted a large number of Israelis and in the savings box, representing about 8 % of the funds.

It was published by Globes, Israel Business News – En.globes.co.il – on June 24, 2025.

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