The Israeli shekel surged Tuesday to its strongest level against the U.S. dollar in four years, trading around 3.17 shekels in continuous trading, despite a slight uptick in the official exchange rate set Monday after the weekend break, which rose 0.5% to 3.20 shekels.
The euro also weakened, trading at approximately 3.73 shekels compared to the previous day’s official rate of 3.7684, according to the Bank of Israel.
Meanwhile, the Energy Ministry announced a surprise, significant reduction in gas prices. Starting at midnight Wednesday, the maximum price for a liter of 95-octane unleaded gasoline at self-service stations—including VAT—will fall by 26 agorot to 6.85 shekels. The surcharge for full-service remains unchanged at 25 agorot per liter.
The sharp appreciation of the shekel in recent days has raised concerns among exporters and industrial manufacturers, who warn that continued declines in the dollar could severely harm Israel’s export-driven sectors. “If we hit a rate of 3.00, exports may simply stop,” warned industry representatives, urging the Bank of Israel to intervene in the currency market.
Analysts attribute the shekel’s strength to several factors: reduced investment risk following the winding down of the war, optimism in global stock markets and Israel’s unexpectedly strong current account balance driven by robust defense and high-tech exports. Recent large-scale foreign investments and acquisitions of successful Israeli companies have also fueled a high influx of dollars into the local economy, increasing the supply of foreign currency. Additionally, gains in the Tel Aviv Stock Exchange have drawn further foreign investment.
Economists from major Israeli banks say the dollar may continue its downward trend, potentially reaching 3.10 shekels, and possibly even approaching parity at 3.00 within the next year. The shekel’s strength has already made overseas travel cheaper for Israelis. The dollar’s peak this year was on April 9, when it hit 3.82 shekels; since then, it has fallen by 65 agorot.