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The Strong Shekel: Is it Time to Sell?
ByAinvest
Tuesday, Jul 8, 2025 5:38 am ET1min read
The US dollar has fallen by 10% against a basket of major currencies this year, leading to losses for Israelis invested in US assets. Despite the dollar's depreciation against the Israeli shekel, market experts advise against increasing exposure to the dollar, citing geopolitical improvements in Israel supporting the shekel's appreciation. Experts expect the shekel to continue strengthening, with some estimating it could reach NIS 3/$ or lower.
The US dollar has experienced a significant depreciation this year, falling by 10% against a basket of major currencies. This trend has resulted in substantial losses for Israelis invested in US assets. Despite the dollar's depreciation against the Israeli shekel, market experts advise against increasing exposure to the dollar. Instead, they cite geopolitical improvements in Israel as a key factor supporting the shekel's appreciation.According to Bank Leumi strategist Kobi Levi, the shekel's appreciation is primarily due to the depreciation of the dollar on world markets. Levi expects the geopolitical improvements in Israel to continue supporting the shekel's strength [1]. Similarly, Meitav chief economist Alex Zabezhinsky predicts that the shekel could continue to strengthen, potentially reaching levels of NIS 3/$ or lower [2].
Experts suggest that the shekel's appreciation is linked to the performance of the S&P 500 Index in the US. When the index rises, the exchange rate falls, indicating that the shekel strengthens. This trend is expected to continue, with financial institutions likely to reduce their currency exposure in favor of the Tel Aviv Stock Exchange to improve returns [2].
In conclusion, while the US dollar's decline presents opportunities for investors, market experts advise caution. The Israeli shekel's appreciation, driven by geopolitical improvements and the dollar's depreciation, suggests that the shekel could continue to strengthen. Investors should consider this trend when making decisions about their asset portfolios.
References:
[1] https://www.telegraphindia.com/business/rupee-gains-1-paisa-to-87-30-against-us-dollar-in-early-trade/cid/2088242
[2] https://en.globes.co.il/en/article-nows-the-time-to-buy-the-dollar-think-twice-1001515171
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