Shekel value hits highest level in decades as dollar drops

The Israeli shekel continued to strengthen on Tuesday, reaching levels not seen in nearly three decades, as the U.S. dollar weakened sharply amid ongoing regional tensions.

The dollar fell about 1.2% to around 3.01 shekels, nearing the symbolic 3-shekel mark- a level not seen since October 1995. The euro also declined against the shekel, dropping roughly 0.5% to trade near 3.55.

Globally, currency markets showed a more mixed picture, with the euro and British pound gaining against the dollar, pointing to broader weakness in the greenback.

The U. blockade targeting Iranian exports, along with uncertainty surrounding Washington-Tehran talks, has weighed on global markets. At the same time, signs of potential progress toward a ceasefire have boosted investor confidence, supporting Israel’s currency.

A combination of relatively contained military tensions and renewed diplomatic prospects has contributed to the shekel’s gains. However, the trend could quickly reverse if the security situation deteriorates.

Despite the shekel’s strong performance, concerns remain over the economic impact of the war, with its direct costs estimated in the tens of billions of shekels, adding pressure to Israel’s public finances and longer-term outlook.