Bank of Israel buys $801M to curb shekel surge, hits tech firms
Bank of Israel bought $801 million in May to slow a near three-decade high in the shekel, intervening for the first time in this way since 2021 as exporters face tighter margins.
The Bank of Israel purchased $801 million in May to check a rapid rise in the shekel, intervening in foreign exchange markets for the first time since 2021. Purchases were carried out through several transactions and increased Israel’s foreign reserves by about $2.9 billion, the central bank reported.
Despite the operations, the shekel closed May about 4.6% stronger against the U.S. dollar and reached levels near a three-decade high. Other regional and global currencies weakened since February amid U.S.-Israel-Iran tensions, while the shekel appreciated.
The central bank pointed to rising global equity markets and local institutional flows as factors behind the currency’s strength. Israeli pension funds have been hedging currency risk by selling dollars and buying shekels as U.S. stock indexes climb, which put upward pressure on the local currency.
In its report the Bank of Israel described the purchases as aimed at preserving the ‘orderly functioning of the markets’ and framed them as measures to keep exchange-rate conditions orderly rather than a shift to a permanent exchange-rate policy.
A stronger shekel affects exporters that earn in foreign currency but incur costs in shekels, notably high-tech companies. High-tech exports totaled $78 billion in 2024 and accounted for 57% of Israeli exports in the first half of 2025. Several technology firms have cut local staff and increased use of overseas contractors; the central bank’s report said such adjustments could continue into 2026.
The interventions contrast with 2023, when the Bank of Israel acted to support the shekel after sharp drops. The latest operations were designed to temper rapid appreciation rather than to prop up a weakening currency.
Market participants expect the shekel’s future path to depend on global equity trends, domestic capital flows and further institutional investor actions. The Bank of Israel emphasized market stability and did not set a long-term exchange-rate target.
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