Institutional FX sales drive shekel appreciation, following non-resident flows in Q2–Q3

ISRAEL - In Brief 04 Feb 2026 by Sani Ziv
Since September 2024, the shekel has strengthened markedly, reaching multi-year highs and outperforming most major currencies. Over this period, the shekel has appreciated by around 18% against the U.S. dollar, about 23% against the Japanese yen, and roughly 12% against the euro. At the same time, the dollar itself weakened by around 7% against the euro, indicating that part of the move reflects broad global dollar dynamics rather than local factors.The chart shows the exchange rates of the shekel against the U.S. dollar and the euro, alongside the nominal effective exchange rate. All indexed to 1998=100 in order to allow a consistent comparison with the currency basket. Over the past decade, the chart highlights a broad appreciation of the shekel, both in effective terms and in bilateral rates. In 2023, and more notably in 2024, the shekel depreciated amid a rise in Israel’s risk premium and heightened uncertainty. However, from late 2024 onward, the trend reversed, with a very strong appreciation of the shekel, particularly against the U.S. dollar.Graph 1Index of NIS/$ exchange rate, and the nominal effective exchange rateSource:  Bank of IsraelInstitutional investors intensified FX salesFrom a flow perspective, the fourth quarter was dominated by large net FX sales by institutional investors—pension funds, provident funds, and insurance companies—with net sales of about USD 13.2 billion in Q4 2025, up from roughly USD 10.4 billion in Q3. At the same time, non-residents shifted to net FX purchases of around USD 1.7 billion in Q4, after net sales of about USD 3.7 billion in Q3, signaling renewed foreign inflows.The business sector (importers and exporters, including h...

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