Foreigners were the dominant segment supporting shekel appreciation in Q2

ISRAEL - In Brief 06 Aug 2025 by Sani Ziv
The Israeli shekel appreciated significantly in Q2 2025, gaining approximately 9.3% against the US dollar and 1.5% against the euro, driven by improved investor sentiment following Operation “Am KeLavi” and broad-based dollar weakness in global markets. The shekel also strengthened by 6% in effective nominal terms against Israel’s main trading partners. In the second quarter of 2025, nonresidents sold net $8.9 billion in FX (following 2.9bn in Q1), while the business sector purchased $5.3 billion—driven by increased buying from major importers and reduced sales from exporters compared to the previous quarter. Israeli institutional investors (pension funds, provident funds, and insurers) showed modest activity, purchasing just net $0.1 billion, while the financial sector (mainly banks) sold $0.2 billion. In short, the sharp shekel appreciation was due to foreigners selling large amounts of FX. It is interesting to note that Israeli institutions were not net FX sellers in Q2, despite initial assessments.

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