Why Is the Shekel So Strong? An Insider's View From One of Israel's Longest-Serving Currency Specialists By Daniel Eisenberg, Chief Commercial Officer at IsraTransfer
- Toviyah Stamelman
- 9 hours ago
- 5 min read
If you're moving to Israel, investing in property here, or simply sending money home from abroad, you've probably had the same conversation a thousand times: Why is the shekel so strong? By any conventional logic, it shouldn't be. Israel has spent much of the past two and a half years navigating war on multiple fronts, including a direct military exchange with Iran earlier this year. And yet the shekel just keeps gaining ground. Over the past two months alone, it has appreciated 8.3% against the US dollar and 7.2% against the euro — moves the Bank of Israel itself described as "sharp." For internationals trying to plan a life here, it's the question that matters most. So let's unpack it.
The Shekel's Surprising Resilience
To understand the strength of the shekel, you have to understand what hasn't broken Israel — and there's a long list. Two and a half years of war in Gaza. A multi-front conflict involving Hezbollah, the Houthis and Iranian proxies. A short but intense war with Iran in early 2026 that, while now in a fragile ceasefire, briefly contracted Israeli GDP by 3.3% in the first quarter. By the textbook, any one of these should have rattled the currency. Instead, the shekel has been one of the strongest performers in the developed world.
The reason is that markets, in the end, look at fundamentals — and Israel's fundamentals are remarkable.
The Hi-Tech Engine That Won't Quit
Israel's tech sector continues to do what it has always done: produce world-class companies that attract enormous global capital. In March 2026, Google completed its $32 billion acquisition of Israeli cybersecurity firm Wiz — the largest exit in Israeli tech history, and the biggest acquisition Google has ever made anywhere in the world. That single deal is expected to inject around $3.2 billion into Israel's state coffers in tax proceeds alone.
Wiz is the headline, but it isn't isolated. International investment in Israeli AI, cybersecurity, fintech and defence tech has accelerated, not contracted, during the war years. Companies and capital keep arriving. When the world's largest technology firms vote with their wallets — at this scale, at this moment — markets notice, and currencies respond.
A Stable Economic Story Beneath the Headlines
While the geopolitical headlines have been dramatic, Israel's economic data has been quietly impressive. The economy grew faster than the average of the world's developed nations in 2025. Israel's credit rating has been holding up better than many analysts expected. Tax revenues are coming in strong. And inflation — perhaps most importantly — has remained well-behaved, sitting at just 1.9% in April 2026, comfortably inside the Bank of Israel's target range.
That last point matters more than it might sound. In most countries that have been through what Israel has been through, you'd expect runaway inflation. The fact that Israel has avoided that is a major reason the shekel has held its strength.
What the Recent Interest Rate Cut Really Tells Us
This brings us to the most interesting development of the last few days. On 25 May 2026, the Bank of Israel cut its benchmark interest rate from 4% to 3.75% — the third cut in six months, and the first since January.
This is worth pausing on, because central banks generally only cut rates when they're confident the economy can handle it. The Bank of Israel cited three things in its decision:
The sharp appreciation of the shekel, which itself helps moderate inflation
Stable inflation at 1.9%
Reduced geopolitical risk following progress in US-Iran talks
In plain English: the Bank felt comfortable enough to start loosening monetary policy. That's a quiet vote of confidence in the direction Israel is heading. It's worth noting that some economists, such as Mizrahi Tefahot's chief markets economist, have cautioned that this is not necessarily the start of a sustained easing cycle — the Bank itself warned that geopolitical risks remain significant. But the signal is meaningful: Israel's central bank sees enough stability to act.
For anyone holding shekels or planning to convert into them, this matters. Lower interest rates can sometimes weaken a currency, but in Israel's case the move is more nuanced — it reflects the shekel's strength, not weakness.
What This All Means If You're Holding Dollars or Pounds
If you're an American or British client looking at Israel right now, the picture is harder. Sterling is at its lowest level against the shekel since 2022, currently around 3.92. The dollar, having weakened by over 8% against the shekel in just two months, is buying significantly fewer shekels than it was at the start of the year. For families purchasing property, paying mortgages, transferring pensions, or making aliyah, every percentage point now matters.
The temptation is to wait — to hope the shekel weakens, the dollar recovers, the pound bounces back. I understand the instinct. But it's worth being honest: as long as the fundamentals stay intact — strong tech sector, controlled inflation, resilient growth, and a central bank confident enough to start cutting rates — there is little obvious reason for the shekel to give back its gains in the near term.
The Good News
Here's the more optimistic note to end on. The strong shekel reflects a strong Israel — and that's what most internationals are actually here for. People aren't moving to Israel, investing in Israel, or building a life in Israel because they're chasing a cheap currency. They're doing it because Israel keeps proving, year after year, that it's one of the most resilient and dynamic economies in the world. The shekel is simply the financial expression of that story.
What we can do — and what we've been doing since 2008 — is help internationals move money in and out of Israel as efficiently as possible. That means access to far better exchange rates than the high street banks typically offer, a team that understands the practical realities of Israeli property purchases, aliyah, and cross-border pension flows, and a real person at the end of the phone who can talk you through how the process works. None of that changes the headline rate on a given day — but it does make sure that when you do transfer, more of your money ends up where it's meant to be.
Daniel Eisenberg, Chief Commercial Officer at IsraTransfer, specialises in guiding international buyers through the financial complexities of purchasing property in Israel. Since 2008, IsraTransfer have supported over 15,000 clients worldwide, providing a concierge-level service for large-sum property transfers that isn't available through traditional banks — helping investors secure better exchange rates and transfer with complete confidence.
Contact via WhatsApp: +972 586282929 |
This article is for general information only and does not constitute financial, investment, tax or legal advice. Exchange rates, interest rates and economic forecasts referenced reflect publicly available information at the time of writing and are subject to change without notice. IsraTransfer is a specialist currency exchange and international payments provider; we do not offer investment, tax or financial planning advice. Before making decisions relating to property purchase, the transfer of significant sums, or any currency hedging strategy, readers should seek advice from a qualified independent adviser regulated in their jurisdiction.
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