The shekel is continuing to weaken against the US dollar. In afternoon inter-bank trading, the shekel is up 0.51% against the dollar at NIS 3.154./$. This Israeli currency is at its weakest against the dollar since late March. The shekel has also weakened sharply in recent months against other major currencies and is today and the shekel-euro rate is currently 0.14% higher at NIS 3.515/€.
The shekel has fallen nearly 4.5% against the shekel since the elections on October 27 - a drop clearly felt by investors and consumers in Israel. Over the past month, the shekel has weakened by 3.42% against the dollar and lost 1.58% in value over the last five days alone.
The volatility in the foreign exchange market is attributed to a combination of several factors, both local and global. Altshuler Shaham Financial Services founder and co-CEO Yossi Menashe tells "Globes" that this recent depreciation is no coincidence. "The dollar has been consistently strengthening since hitting a low of NIS 2.80/$ around June, even though there were occasional minor corrections along the way," he says.
According to Menashe, two main drivers are weakening the shekel. "First, interest rate differentials. While we are seeing interest rates fall in Israel, with no current pressure on the Bank of Israel to raise them, inflation remains a concern in the US, and interest rate cuts there have been delayed. Secondly, there is intense uncertainty, both surrounding the US elections and here at home. There are open questions regarding policy toward Iran in the post-election period. All of this adds a risk premium, which is manifesting as a weakening of the shekel."
Menashe added that some market participants have rushed to take "long dollar" positions in the short term to hedge against the US election results. "In the eyes of local investors, the dollar is once again serving as a safe-haven asset," he said.
Bank Hapoalim chief financial markets strategist Modi Shafrir pinpoints the trend: "Today’s rise in the (shekel-dollar rate) dollar stems from two main factors. Yesterday’s declines on the Nasdaq (following an initial gain), and ongoing political uncertainty, specifically regarding the formation of a government versus the prospect of new elections, alongside geopolitical uncertainty surrounding the possibility of an attack on Iran."
These points align with the assessment of Eytan Kleinman, a managing partner at Long Road, who also believes that the political and security situation is weighing on the shekel. "The uncertainty surrounding the formation of a government, coupled with concerns over a renewed confrontation with Iran, are putting pressure on the local currency," he stated. "Compounding this are market declines in the US, which further strain the shekel and amplify exchange rate volatility."
The big winners: Exporters
While for many Israeli consumers, a stronger dollar translates into higher costs for air travel, imported goods, and online shopping, others stand to gain. Israeli exporters, whose revenue is primarily in dollars, while their payroll and operational expenses are paid in shekels, are seeing an immediate improvement in their profitability.
Kleiman clarified: "In such an environment, companies that sell their products in dollars while incurring a significant portion of their expenses in shekels may benefit from a weakening of the local currency. During the period when the shekel was strengthening, some companies adjusted their prices for customers to protect their profit margins. Now that the trend in the dollar exchange rate is reversing, these same companies stand to benefit both from dollar-denominated revenue, which are now worth more in shekel terms, and from the price adjustments they previously implemented."
The next test: Inflation
However, the strengthening of the U.S. currency has a flip side that will soon be put to the test. Menashe warned that any further significant weakening of the shekel would hit the pockets of ordinary citizens. "Ultimately, a strong dollar translates into higher imported inflation," he cautioned. "The costs of goods, services, and imported products are rising. If inflation rears its head again, the Bank of Israel might find itself compelled to pause and shift course, potentially even returning to a path of interest rate hikes. Consequently, we are in a highly sensitive period, and every market move will be scrutinized with the utmost care in the coming days."
Published by Globes, Israel business news - en.globes.co.il - on November 3, 2026.
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