May 7, 2026
The shekel strengthens to its highest level in 30 years, what are the reasons?
תמונה: chatgpt
The shekel strengthened significantly against the dollar and reached a level of about 2.90 shekels per dollar this week.
This is the highest level of the shekel against the dollar in the last 30 years.
There are several reasons for the strengthening of the shekel.
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The first reason is the general weakening of the dollar against world currencies. But according to the Bank of Israel, the shekel has strengthened not only against the dollar but also against the euro and other currencies. Therefore, it is also about a strong shekel, not just a weak dollar.
The second reason is an increase in exports from Israel. The past year was a successful year in high-tech. Major acquisitions like Google's purchase of Wiz likely influenced the shekel. Additionally, there was an increase in sales of defense industries. These sales increased the demand for shekels.
The third reason is the activity of Israeli institutional investors such as pension funds and insurance companies. These entities have many investments abroad. In recent years, global stock markets have risen, and therefore their investments in dollars have grown. In order to maintain balance, they sell dollars and buy shekels. This created a high demand for the shekel. For this reason, in recent years, there has been a correlation between rises in the American stock market and the strengthening of the shekel, and vice versa.
The strong shekel is good for consumers in Israel. But it makes things very difficult for exporters. Exporters receive money in dollars but pay salaries and expenses in shekels. Therefore, some exporters are now demanding that the Bank of Israel intervene to weaken the shekel.