“We don’t have a single dollar or euro left, and even pounds sterling are being snapped up.” That is what currency exchange operators told ynet on Wednesday morning. According to them, they have not seen in years the phenomenon that has intensified in recent days, with Israelis purchasing large amounts of foreign currency.
The trend comes as soaring insurance costs for shipments because of the war in the Middle East have driven up the cost of transporting goods, including banknotes, from abroad to Israel. Commercial banks have also reported shortages of foreign currency cash in recent days.
Until now, the rush to buy foreign currencies had been driven by the sharp decline in the value of the dollar, euro and other currencies ahead of the summer vacation season, following a more than 10% appreciation of the shekel in recent months. Some buyers also viewed foreign currency as an investment. However, demand increased even further beginning Tuesday after Bank of Israel Governor Amir Yaron said that interest rate cuts would be implemented at a faster pace as inflation moves closer to the lower end of the government’s 2026 target range of 1% to 3%.
Since Yaron’s remarks Tuesday afternoon, the shekel has weakened significantly against the dollar. The dollar is now trading at about 2.87 shekels, while the euro is trading at about 3.33 shekels. By comparison, the representative exchange rates set by the Bank of Israel about an hour after Yaron’s speech at the Eli Hurvitz Conference stood at 2.82 shekels per dollar and 3.29 shekels per euro.
While the Bank of Israel governor strongly hinted that the central bank is likely to cut interest rates again soon, probably by a quarter percentage point to 3.5%, he also appeared to rule out, for now, the possibility of the central bank purchasing billions of dollars in the foreign exchange market to artificially boost the currency’s value.
“The governor’s statement changes the rules of the game and requires businesses to respond quickly,” said Eran Buchris, owner of an accounting firm that provides strategic consulting services to businesses. “The strengthening of the dollar since yesterday is probably not just another market fluctuation. It is a warning sign for businesses to immediately review their agreements and their exposure to foreign currency.
“This is exactly the time for managers to pause, reassess their strategy and examine how this change affects their pricing and expenses, including their credit structure and refinancing options. Alongside the instability in the foreign exchange market, the expectation of an interest rate cut also creates an opportunity to secure cheaper financing now, which could help ease cash flow pressures.”