Currency Markets Stabilize as Dollar Stays Above NIS 2.99

Currency markets eased after the dollar climbed yesterday to its highest level in more than a year. The Israeli foreign-exchange market also stabilized after the dollar briefly touched NIS 3 yesterday, and it is now trading above NIS 2.99, while the euro stands at NIS 3.40.

In global trading, the dollar index, which tracks the greenback against major currencies, was little changed at 101.5, its strongest level since April 2025. The euro slipped 0.1% to above $1.13, and sterling was steady at $1.32.

Economist and Calcalist commentator Shlomo Teitelbaum said the shekel’s weakness in June does not match the usual pattern. He noted that there is normally a strong link between Wall Street and the shekel, with the Israeli currency strengthening when the S&P 500 rises and weakening when it falls, but from June 10 to June 18 the S&P 500 strengthened while the shekel did not. The trend was especially visible after June 14, when the agreement with Iran was announced.

Teitelbaum said the market view is that the shift is not only because institutional investors are increasing foreign-currency exposure, but also because capital flows to Israel are slowing overall. He said there has been a modest rise in Israel’s risk premium since June 14, calling it small for now but a sign of a change in direction. Markets, he said, are realizing that the optimistic scenario of a return to a risk premium below late-2022 levels, after the 2023 uptick tied to the judicial overhaul, is probably further away than expected.

The dollar’s strength globally is being driven by growing expectations of an earlier Fed rate hike because inflation remains stubborn, even as oil prices continue to fall on easing tensions in the Persian Gulf. Fed funds futures now price in more than an 85% chance of a 25-basis-point hike by September, and Bank of America and Deutsche Bank both recently revised their outlooks from no rate change through year-end to one increase, citing the resilience of the U.S. economy.