According to the Bank of Israel, the shekel strengthened by about 6% in the second half of 2025, after already rising earlier in the year. This reflects growing confidence in Israel’s economy and financial stability. During 2025, Israel’s risk level dropped, especially after military developments and the ceasefire in Gaza, which helped calm markets.

Israel also received positive signals from abroad. A major credit rating agency changed Israel’s outlook to “stable,” the Tel Aviv Stock Exchange performed better than many global markets, and exports in high tech and defense continued to grow. All of this increased demand for shekels.

In the past, the shekel usually moved together with US stock markets. When US markets went up, the shekel strengthened, and when they fell, it weakened. That connection still exists, but experts say it is not as strong as it used to be.

One reason is that the US dollar itself is weakening worldwide, partly due to US economic policy and trade tensions. At the same time, investors are spreading their money across more global markets instead of focusing mainly on the US. This change affects how currencies move, including the shekel.

There may also be new buyers of shekels, such as foreign investors or Israeli companies, adding to the currency’s strength. Israeli financial institutions might also be choosing to reduce their exposure to foreign currencies, which means buying more shekels.

Another trend is that Israelis are investing less money in US-focused funds, like those tracking the S&P 500, and more in local or global investments. Since the Israeli stock market has performed well, this shift supports the shekel.

Even the recent interest rate cut by the Bank of Israel did not weaken the shekel. Experts say interest rates no longer have as much influence on the currency as they once did, unless there is a very large change.

In short, the shekel is strong not just because of stock markets, but because of broader confidence in Israel’s economy, global currency trends, and changes in how money is invested.

Based on Globes article by Asaf Zagrizak, “New forces at play as shekel appreciates,” published January 21, 2026.
https://en.globes.co.il/en/article-new-forces-at-play-as-shekel-appreciates-1001532631