Israel shekel hits 30-year high vs dollar as intervention unlikely

By Steven Scheer

JERUSALEM, Jan 28 (Reuters) - The shekel ILS= hit a 30-year high versus the dollar on Wednesday, buoyed by a weak greenback globally and an improving geopolitical environment contributing to post-war economic recovery in Israel.

But despite the currency's gains, the Israeli central bank has so far been hesitant to intervene, maintaining that the market is functioning properly.

The shekel reached a rate of 3.0854 per dollar, its strongest level since March 1996. At 1250 GMT, it stood at 3.091, flat from Tuesday.

So far in 2026, the shekel has gained around 3% versus the dollar, and 18% over the past year.

The shekel's strength, which also helps contain price pressures, was a key reason for a surprise interest rate reduction by the central bank earlier this month, its second successive 25-basis-point cut.

But Bank of Israel Governor Amir Yaron has said there is no rush to intervene, as in the past.

"It is clear to us that a strong shekel adds to exporters’ challenges," Yaron told a session of parliament's finance committee on Wednesday. "At the same time, we see the export data. Our role is how the shekel and the exchange rate affect price stability and market functioning."

He noted that if there are issues with exports, "they are not on the monetary side but on the fiscal side".

In the past, the central bank bought tens of billions of dollars to keep the shekel from appreciating too fast and harming exporters. It sold $8.5 billion of foreign currency at the outset of the Gaza war in October 2023 to defend the shekel, but has largely stayed out of the market since.

Speaking to Reuters on the sidelines of the World Economic Forum in Davos last week, Yaron said the Israeli currency's strength reflected the resilience of the Israeli economy and came amid solid export performance. It was also acting as a tailwind that was moderating inflation, he said.