USD/ILS is around 3.01, down roughly 10% over the year even though the Bank of Israel has been cutting rates. When a currency strengthens while its own rate advantage narrows, the story is about risk and flows rather than carry. Here is what the reporting says, with sources attached.
A falling risk premium
The clearest driver is risk. Through the first half of 2026, signs of de-escalation and ceasefire around Iran pulled Israel's risk premium down toward where it sat before October 2023. Bank of Israel Governor Amir Yaron said the strength reflected the resilience of the Israeli economy and a lower risk premium, alongside a broadly weaker dollar.
Strength without a rate advantage
What makes the shekel interesting in 2026 is that it gained while its interest-rate appeal shrank. The Bank of Israel cut its benchmark to 3.75% in late May 2026 and again to 3.50% in July, according to the Bank of Israel. Normally a rate cut is a headwind for a currency. Here the central bank could cut precisely because the strong shekel was already doing disinflationary work, with inflation steady around 1.9%. A currency that rises as its carry narrows is being pushed by something other than yield.
The flows underneath
That something is capital flows.
Part of the move is also simply the other side of a soft dollar. The Bank of Israel governor listed broad dollar weakness as one of the structural forces behind the shekel in 2026, alongside the lower risk premium and the equity-linked institutional flows. So the shekel is both strong on its own merits and lifted by a dollar that has been on the back foot against several currencies this year.
What it looks like in the data
In our history USD/ILS sits around 3.01, down close to 10% over the past year, which makes the shekel the strongest performer across the 33 pairs we track. As with every pair, the rate carries its source and market_session, so a mid-week market rate is labeled differently from a weekend or a daily reference fix. During a fast repricing, that label is the difference between a number you can trust and one you cannot.
None of this is a forecast. We are not calling the next move in USD/ILS, and the drivers above explain where the rate already is, not where it is going. What we publish is the rate, the trend, and the source behind each figure.