Dollar Nears Three-Shekel Mark as Shekel Weakens Sharply

The U.S. dollar continued to strengthen against the shekel on Tuesday, trading around 2.99 shekels after the official rate was set at 2.96 the previous day. At the start of the month, the dollar was still around 2.80 shekels, but it has climbed markedly since then.

The move comes amid expectations of an agreement between Iran and the United States and reports of possible restrictions on the IDF in Lebanon. The article says the market is also reacting to signs that the broader confrontation in the Middle East may be easing and to Israel’s complicated position in Lebanon.

The euro was trading at about 3.42 shekels, roughly 3 agorot higher than its official rate yesterday. Yossi Freiman, CEO of Prico Risk Management, Finance and Investments, said the dollar’s global strength is also being felt locally, with the currency moving closer to 3 shekels.

Freiman said the shekel’s earlier strength, which had pushed the exchange rate toward 2.8 shekels per dollar, was driven by four main factors, including a weaker dollar abroad, a steep drop in geopolitical risk, and extreme capital flows from institutional investors and foreign investments. He added that rising U.S. interest rates, fear of escalation, and changes in holding patterns have now altered those forces, supporting the dollar. In his view, unless stock markets weaken sharply, and given lower energy prices, inflation pressures are easing and the shekel’s medium- and long-term depreciation potential remains limited.